Extendicare Inc. (TSE:EXE) - A Closer Look at its Fair Value and Future Prospects

Extendicare Inc. (TSE:EXE) is trading at a relatively cheap price compared to its industry peers, with a price-to-earnings ratio of 13.76x, significantly lower than the industry average of 23.88x. Despite its high beta, which indicates share price volatility, the company's revenue growth is expected to be in the teens in the upcoming years, suggesting a solid future ahead. This could lead to robust cash flows and a higher share value.

Extendicare Inc. (TSX: EXE) is trading at a relatively affordable price compared to its industry peers, with a price-to-earnings ratio (P/E) of 13.76x, significantly lower than the industry average of 23.88x [1]. Despite its high beta of 1.30, indicating higher share price volatility, the company's revenue growth is expected to be in the double digits in the upcoming years, suggesting a solid future ahead. This could lead to robust cash flows and a higher share value.

Financial Highlights

Extendicare reported a market cap of CAD 1.06 billion and an enterprise value of CAD 1.24 billion [1]. The company has 83.82 million shares outstanding, with a 9.71% increase in shares over the past year [1]. Extendicare's trailing P/E ratio is 13.27, while the forward P/E ratio is 14.39 [1]. The company's return on equity (ROE) is 65.09%, and return on invested capital (ROIC) is 16.93% [1].

Recent Acquisitions and Growth

In the second quarter of 2025, Extendicare reported adjusted EBITDA of CAD 39.8 million, an increase of 15.4% compared to the same period last year [2]. The company's home health care average daily volume (ADV) increased to 33,310, a 10.9% increase from Q2 2024 [2]. Extendicare completed several strategic acquisitions, including the purchase of nine Class C long-term care (LTC) homes from Revera for CAD 41.9 million in cash and the assumption of CAD 27.4 million in liabilities [2]. Additionally, the company acquired Closing the Gap for approximately CAD 75.1 million in cash, subject to customary working capital and other adjustments [2].

Future Outlook

Extendicare's recent acquisitions and growth in home health care services suggest a promising future. The company's focus on strategic acquisitions and operational efficiency is likely to drive revenue growth and improve cash flows. The high ROE and ROIC indicate strong profitability and efficiency, which can lead to higher share value over time.

References

[1] Extendicare Statistics. Stockanalysis.com. Retrieved July 2, 2025, from https://stockanalysis.com/quote/tsx/EXE/statistics/

[2] Extendicare Inc. announces 2025 second quarter results. Morningstar. Retrieved July 2, 2025, from https://www.morningstar.com/news/globe-newswire/9507657/extendicare-announces-2025-second-quarter-results