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 Capital Senior Living (NYSE:CSU) jumped as much as 10% today after turning in a strong quarterly earnings report.
So what: The company, one of the country's largest operator of senior living communities, said that revenues grew 17%, to $83.3 million, while adjusted Cash From Facility Operations increased 56%, to $0.49 a share. Actual income declined, however, as additional operating expenses and depreciation canceled out the new revenue. Earnings per share dropped from $0.01, to a loss of $0.06, while adjusted net income was $0.07, $0.02 below estimates. CEO Lawrence Cohen noted "continued occupancy growth" and the "successful implementation of our strategic plan" as key factors in the successful quarter.
Now what: While Capital Senior Living chooses to focus on CFFO and other metrics, such as EBITDAR, the relative lack of net income is concerning. The company is putting efforts into expansion, but it's unclear when earnings are going to justify such a lofty share price. I'd like to see the bottom line catch up first. Shares have more than tripled in the last year, and seem to have become disconnected from the fundamentals.
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