Why Capital Senior Living Shares Plunged

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of senior community operator Capital Senior Living sank 10% today after its quarterly results disappointed Wall Street.

So what: The stock has been sluggish in recent months on concerns over slowing demand, and today's third-quarter revenue miss -- $88 million vs. the consensus of $90.1 million -- only reinforces that worry. While Capital Senior's cash from facility operations, or CFFO, increased a solid 18%, today's price action suggests that it isn't growing fast enough to justify its seemingly lofty price multiples.


Now what: Management remains confident that occupancies can grow to an optimal rate of 92% to 93%.

"We differentiate Capital Senior Living as the value leader in providing quality seniors housing and care at reasonable prices," CEO Lawrence Cohen said. "We are well positioned to make meaningful gains in shareholder value as a substantially all private-pay business in an industry that benefits from need-driven demand, limited new supply, and an improving economy and housing market."

Of course, when you couple Capital Senior's still-hefty debt load with its forward P/E of 40, I'd wait for a wider margin of safety before buying into that bullishness. 

More reliable ways to gain wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Why Capital Senior Living Shares Plunged originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners