Why Emeritus Shares Popped

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 living services provider Emeritus (NYSE: ESC  ) climbed as high 10% today after its quarterly results and outlook impressed Wall Street.

So what: The stock has slumped in recent months on concerns over slowing growth, but today's Q2 results -- adjusted cash from facility operations increased 20% on a revenue jump of 27% -- coupled with decent guidance for the full year naturally eases some of those worries. In fact, Emeritus' occupancy rate rebounded 20 basis points sequentially to 86.7%, giving analysts plenty of good vibes about its growth going forward.  

Now what: For the full year, management still sees CFFO of $2.10-$2.20 per share on revenue of $1.85 billion-$1.90 billion.

"The 75-plus demographic continues to expand," CEO Granger Cobb said in a conference call with analysts. "In addition, as the economy and consumer confidence improves, and people become more educated about senior living options, we expect market penetration to increase."

Given Emeritus' still-hefty debt load, however, conservative Fools should think twice before buying into those prospects.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.



Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2576529, ~/Articles/ArticleHandler.aspx, 4/21/2014 6:24:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement