Sienna Senior Living Inc. (TSX: SIA) offers a full range of seniors’ living options, including independent living, assisted living, long-term care, and specialized programs and services.

Key Updates:

• RSI at an overbought zone: On the daily price chart, the 14-days RSI of SIA stock is hovering near the overbought zone of 65.91, which might result in a possible price correction in the coming trading sessions. Moreover, the stock is trading near the upper band of its 20-days Bollinger band, which further suggest a probable decline in the coming trading session.

Technical Price Chart (as on January 04, 2002) Source: REFINITIV, Analysis by Kalkine Group

• Weak liquidity profile: In Q3FY21, the company reported its current ratio of 0.51x, as compared to the industry median of 1.54x, which suggest that the company is struggling to fund its current liabilities through its current assets. Moreover, the group reported a negative cash conversion cycle of 5 days, as compared to the industry median of 32.4 days. The above showcased weak operational efficiency.

• Lower debt protection metrics: At the end of Q3FY21, the group reported its net debt to EBITDA of 34.02 times, significantly higher than the industry median of 5.65 times. A higher ratio indicates poor debt protection capability of the firm.
  

Valuation Methodology (Illustrative): Price to Earnings

Analysis by Kalkine Group

Stock Recommendation:

Due to the rising cases of COVID -19 viruses across the North America, we have seen a dip in the occupancy level across the retirement residences, which might dampen the company’s operating performance. We have valued the stock using Price to Earnings based relative valuation method and have arrived at a double-digit downside (in percentage terms). For the said purposes, we have considered peers like Extendicare Inc, Killam Apartment REIT etc. Considering the aforesaid facts, we recommend a ‘Sell’ rating on the stock at the current market price of CAD 15.35 at 9:45 am Toronto time on January 05, 2022.

One-Year Technical Price Chart (as on January 05, 2022). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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