Post by
retiredcf on Sep 23, 2024 6:15am
One More
Is WELL mispriced by the market? I would think for a growth company, investors would pile into the stock given the current decrease in rates which help small caps.
It is a smaller company with minimal analyst coverage so inefficiencies can take place. Other times, a stock can be cheap as investors are pricing in certain expectations. In the case of WELL, this could be missed future earnings as its track record of beats has been inconsistent, or it could be pricing in its high level of debt (3.3X net debt/EBITDA). But management has been conducting share buybacks, and so we feel that management believes shares could be undervalued here. We also see that the fundamental story has changed for the better with margins flipping positive and free cash flows coming in nicely. We believe some investors are either too concerned by their high debt loads or are unaware of the fundamental improvements. (5iResearch)