The S&P/TSX Capped Well being Care Index was up 1.7% in early afternoon buying and selling on Could 23. In the meantime, the broader TSX Index was buying and selling within the pink on the time of this writing. Immediately, I need to concentrate on a Canadian healthcare inventory that appears undervalued on the time of this writing. Furthermore, this inventory presents publicity to one of many fastest-growing industries. Let’s soar in.

How has this Canadian healthcare inventory carried out over the previous yr?

Extendicare (TSX:EXE) is a Markham-based firm that gives care and providers for seniors in Canada. Shares of this healthcare inventory have been down 0.4% in early afternoon buying and selling on Could 23. In the meantime, the inventory remains to be up 10% within the year-to-date interval. Canadian buyers who need to see extra can play with the interactive value chart beneath.

Right here’s why I’m enthusiastic about Extendicare for the long run

In earlier articles, I’ve mentioned Canada’s shifting age demographics. Certainly, the nation’s senior inhabitants is in the midst of a dramatic growth because the child boomer era enters the golden years. Markets N Analysis just lately valued the aged care market at US$1.59 trillion in 2021. The report projected that this market would develop to US$2.36 trillion in 2028. That may symbolize a compound annual development charge (CAGR) of 6.8% over the forecast interval beginning in 2022.

This firm unveiled its first-quarter fiscal 2023 earnings on Could 4. It reported adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) of $31.0 million — up $10.8 million in comparison with the earlier yr. In the meantime, common long-term-care (LTC) occupancy improved 60 foundation factors (bps) to 95.1%

Extendicare posted income development of 6.2% yr over yr to $324 million. That development was powered by LTC flow-through funding will increase, increased LTC occupancy, dwelling healthcare ADV development, and billing charge enhancements. Furthermore, adjusted funds from operations (AFFO) rose to $20.8 million or $0.24 per fundamental share in comparison with $12.5 million, or $0.14 per fundamental, share within the first quarter of fiscal 2022.

On the enterprise entrance, Extendicare noticed continued restoration in its LTC properties occupancy. That phase has benefited from a funding bump from Ontario as provinces look to handle the wants of the rising senior inhabitants. ParaMed income in its House Well being Care phase was reported at $107 million — up 8.9% from the prior yr. In the meantime, income in its Managed Providers phase rose 33% to $2.4 million.

Two causes I’m shopping for this healthcare inventory earlier than June

The primary motive I’d look to grab up this healthcare inventory in late Could is its worth. Shares of Extendicare presently possess a horny price-to-earnings ratio of 9.3. This inventory is buying and selling in beneficial worth territory in comparison with its trade friends.

I’m additionally trying to Extendicare for its monster month-to-month dividend. This healthcare inventory final paid out a month-to-month distribution of $0.04 per share. That represents a tasty 6.6% yield.