Brookdale Senior Living, a leader in the senior living industry
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Brookdale Senior Living has been a unique play in the senior living industry. Because of issues with debt and COVID-19, the business has been tough. Let’s dive deeper and see if there’s an opportunity in this stock.
Brookdale is the leader in senior living. As the industry grows, they’re poised to take a lion’s share of it.
Interestingly, there has been a huge undersupply in senior living facilities. According to Brookdale, more supply is entering the market.
Because of the virus, a lot fewer people have moved into senior living facilities. And interestingly, there wasn’t a huge exodus of people leaving senior living facilities.
As things tighten, the company is scaling back on spending and finding other ways of cutting costs. Capital preservation has been one of the top priorities during times of minimal to negative growth.
Currently, these times are tough for senior living providers. But overall, the company is still profitable.
Their PE ratio is 3.5 according to Google, so it's profitable. With the difficulties in the senior living industry, overall, with the elderly population growing, this company will be able to benefit from it.
This is one of my most speculative bullish ideas mainly because the selling pressure for this stock has been immense. Also, despite showing a positive PE ratio, they're showing negative free cash flow. With negative free cash flow, the company is continuing to burn cash. It's not sure when they'll stop the cash burn. Also, we're unsure when they'll need to do another capital raise to finance the cash burn and whether it would be through equity or debt offering.
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