Sunrise Senior Living Inc.
) reached a 52-week high of $8.94 on August 17. The company had a
phenomenal earnings surprise of 325.0% in the second quarter of
2012 and has a year-to-date return of 36.7%. With an impressive
earnings growth expectation of 131.7% in 2012, this Zacks #1 Rank
(Strong Buy) provider of senior living services promises to be a
solid momentum pick.
Healthcare is one of the more recession-proof real estate sectors
and has continually fared better than others during the commercial
real estate downturn. In addition, demand for assisted and
independent living facilities is set to increase in the coming
years as the U.S. demographics are highly skewed towards an aging
Baby Boomer generation. With a considerable presence in these
property types, Sunrise Senior Living is poised to grow.
Strong Second Quarter
On August 2, Sunrise Senior Living reported strong second quarter
results with adjusted net income of 9 cents per share, versus an
adjusted loss of 10 cents in the year-earlier quarter. This also
topped the Zacks Consensus Estimate for an adjusted loss of 4
Adjusted EBITDAR (earnings before interest, tax, depreciation,
amortization and rent) surged 27.4% to $49.7 million, primarily due
to accretive acquisitions and reduction in overhead expenses. Total
operating revenues increased 5.1% year over year to $337.7 million.
Average daily revenue for stabilized properties increased 2.4% to
$223.53 per occupied unit, while average unit occupancy was up 90
basis points year over year to 88.1%.
Surge in Earnings Estimate Revisions
Over the past 30 days, the Zacks Consensus Estimate for 2012
increased 288.9% to 17 cents, implying year-over-year growth of
131.7%. For 2013, the Zacks Consensus Estimate has increased 133.3%
to 2 cents over the same period.
Sunrise Senior Living's valuation looks a bit expensive on a
price-to-earnings (P/E) and price-to-book (P/B) basis. Shares of
Sunrise Senior Living are currently trading at a forward P/E of
54.18x versus the peer group average of 16.88x. On a P/B basis,
Sunrise Senior Living is trading at 4.39x versus 2.23x for the peer
A healthy earnings growth prospect in the current year warrants the
premium valuation of the company.
Chart Resonates Growth Potential
Since June 6, 2012, Sunrise Senior Living shares have fared better
than the simple moving average for 200 days or SMA (200). The
continuous uptrend in stock prices, as mirrored in the following
chart, offers an enticing upside potential going forward. The stock
has also outperformed the S&P 500 index since September 1,
2010, with a stupendous year-to-date return of 36.7% compared to an
S&P 500 tally of 11.0%. Volume is fairly strong, averaging 508K
Headquartered in McLean, Virginia, Sunrise Senior Living provides a
wide array of personalized senior living services. Founded in 1981,
the company is one of the largest providers of senior living
services in the U.S. Its property portfolio includes independent
living facilities, assisted living, care for individuals with
Alzheimer's and other forms of memory loss, nursing, and
rehabilitative care services. As of June 30, 2012, Sunrise Senior
Living operated 307 communities located in the U.S., Canada, and
the U.K. with a unit capacity of approximately 29,800 units. The
company currently has a market cap of $520.3 million.
SUNRISE SENIOR (SRZ): Free Stock Analysis
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