Seniors Housing Weekly Update - Third Quarter Earnings Off To Bad Start
November 5, 2013
Third Quarter Earnings Off To Bad Start
And we thought October was supposed to be the bad month for stocks. Earnings season is upon us, and Capital Senior Living was the first seniors housing company out of the blocks. Investors did not like what they saw, or possibly heard, but we really didn’t think its third quarter was all that bad. Sure, the company missed some estimates, but the acquisition pipeline remains strong. Combined with decent spreads between the cap rate and the company’s cost of debt, these deals should be pretty accretive. Investors didn’t focus on that, mostly on margins and occupancy, which didn’t pan out as they wanted. The reaction? The stock plunged by $3.18 per share, or 13.5% at one point yesterday morning, only to recover some of that loss later in the day. This news may have sent a chill over investors in the other companies, as their prices started to teeter as well. Emeritus came out with its earnings last night, and we will see today how the market reacts after sending its shares down 4% yesterday, getting close to its 52-week low. It may start to get ugly this week.