Colder Weather for Summerset?
Forsyth downgraded SUM price target by 10% today to $6.60 (still way above current share price I suppose)... FY19 earnings downgraded 8%, FY20 downgraded 11% and FY21 downgraded 14%... they clearly have started to see the writing on the wall and realize the market simply wasn't buying their previous $7.35 price target... as I've said before, while sum companies are increasing build rates, margins, and earnings throughout the cycle, sum others are really struggling... sum say this is because those companies were too focused on short term profits (build more and more and more!) rather than focusing on building culture and continuum of care capabilities (which short term: of course they drag on earnings, but long term: support the entire value proposition of the village[s])... the 'gold standard' Ryman has always focused on its care side of things just as much as its development, you'd think sum would have learned there is a reason why they did this and didn't just build lots of units.
Ironic that we were told for years by sum on here that how sum is a great long term investment, will only go up (or words to that effect)... and yet it seems sum were all about borrow high, build big, and cross our fingers things sell... while in the back end the care side of things was severely under developed (not only in terms of beds to units ratio but also in strategy and capability) and the housing market was slowing down... all accumulating in an overhang of units, not a very strong value proposition (to move into a sum village), and a dramatic downgrade in build rate from 600 to 300 ish while they try fix things.
And yet we still hear about the past, about how sum outperformed in the past... of course if you put short term profits ahead of long term prospects and combine that with a huge appreciation in house prices, you will outperform... but these things never last, and I don't know about sum other people, but I don't live in the past.
Ah well, at least sum isn't alone... MET also did the same (and they have leaky buildings as well!)