As of May 22, 2025, Brookdale Senior Living Inc's estimated intrinsic value ranges from $1.35 to $20.09 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $8.44 | +28.7% |
| Discounted Cash Flow (5Y) | $2.18 | -66.8% |
| Dividend Discount Model (Multi-Stage) | $20.09 | +206.3% |
| Earnings Power Value | $1.35 | -79.5% |
Is Brookdale Senior Living Inc (BKD) undervalued or overvalued?
With the current market price at $6.56, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Brookdale Senior Living Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.59 | 0.83 |
| Cost of equity | 6.6% | 9.5% |
| Cost of debt | 5.2% | 23.9% |
| Tax rate | 3.9% | 5.4% |
| Debt/Equity ratio | 3.17 | 3.17 |
| After-tax WACC | 5.4% | 19.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $2 | $4,535M | 73.5% |
| 10-Year Growth | $8 | $5,790M | 52.7% |
| 5-Year EBITDA | $11 | $6,259M | 80.8% |
| 10-Year EBITDA | $14 | $6,885M | 60.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $367M |
| Discount Rate (WACC) | 19.4% - 5.4% |
| Enterprise Value | $1,890M - $6,847M |
| Net Debt | $4,099M |
| Equity Value | $(2,209)M - $2,748M |
| Outstanding Shares | 200M |
| Fair Value | $(11) - $14 |
| Selected Fair Value | $1.35 |
| Metric | Value |
|---|---|
| Market Capitalization | $1313M |
| Enterprise Value | $5413M |
| Trailing P/E | 0.00 |
| Forward P/E | 0.00 |
| Trailing EV/EBITDA | 10.75 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 3.17 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $2.53 |
| Discounted Cash Flow (5Y) | 29% | $0.54 |
| Dividend Discount Model (Multi-Stage) | 24% | $4.02 |
| Earnings Power Value | 12% | $0.13 |
| Weighted Average | 100% | $8.51 |
Based on our comprehensive valuation analysis, Brookdale Senior Living Inc's weighted average intrinsic value is $8.51, which is approximately 29.7% above the current market price of $6.56.
Key investment considerations:
Given these factors, we believe Brookdale Senior Living Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.