[featured in the July issue of The SeniorCare Investor]
With the overall stock market posting its best first half of a year since 1997, one would expect that seniors housing and care stocks would also have performed well. The major benchmarks are up 14% to 17% so far this year, and only two of the providers have topped that.
Of the larger cap providers, The Ensign Group was the star with a 46.7% price increase in six months, and that was after jumping by 74.7% in calendar 2018. The company just keeps on rockin’, and when it splits into two separate operating companies later this year, one for skilled nursing and one for seniors housing and home health care, the expectation is that the superior operating performance will continue.
All the skilled nursing providers posted positive returns in the first half of the year, with Diversicare Health Services joining Ensign in the double-digit return category, even though DVCR has a much smaller market cap and share price and is coming off a bad 2018 when it plunged by 73%.
The seniors housing providers did not fare as well, with only Brookdale Senior Living, posting a positive return. But with its share price still in the dumps, we do not believe any shareholders are happy with the value. Unfortunately, they may have to wait a bit longer before they can post a smiley face. Shareholders of Capital Senior Living are in the same boat. After plunging to $3.48 per share, even leaks about takeover interest and activists piling on to their existing holdings could not bring the value up much from its lows. And Five Star Senior Living? It is still trading below a dollar a share, until the 10-for-one reverse stock split goes into effect. That may keep them listed on the exchange, but it won’t help them financially. The broken record that we are, this should have, and could have, been fixed a few years ago.
