Senior Care

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Hey Guys, the senior care sector has really taken a beating during COVID and the yields are looking really nice. I would like your opinion on the category and whether or not you think that it will not be hurt by politics or some other issues. I am looking at Sienna Senior Care, Extendicare, and Chartwell. Looking forward to your thoughts on these…thanks

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Asked on June 25, 2020 6:06 pm
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Hi Kim,

The industry is certainly under pressure and it has been one of the most impacted by the current pandemic. Sienna has made the news for all the wrong reasons and some of its properties have been hit hard. It has seen hundreds of deaths at its homes, and the CEO resigned. Given the increased scrutiny, it is likely to be the target of lawsuits moving forward. Of the three, I also believe Sienna's dividend is most at risk of being cut or suspended. Extendicare and Chartwell's dividend look OK but anything is possible in this environment.

In terms of valuation - they all look cheap. All are trading below historical averages and at big discounts to analysts estimates. Sienna does look to be the best valued however as mentioned previously, they have been among the hardest hit. It is likely the markets are pricing in several headwinds moving forward.

In terms of growth, Extendicare has the highest expected growth rates. This year is a wash, but next year earnings are expected to jump by 27% as compared to the 16% by Chartwell. Both however, have strong expected growth rates.

Eventually, this industry will rebound but it may take a big improvement in the # of cases, and maybe even a COVID-19 vaccine. The elderly population are the most vulnerable and this impacts these companies at their core. Of those three, I'd stick with either EXE or CSH.UN as SIA appears to have several headwinds ahead.

Mat

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Posted by Mathieu Litalien
Answered on June 26, 2020 5:45 am