Capital Senior is among the larger operators of senior living communities in the U.S. and it is one we have referred to as one of the "entrance stages" or even the "training wheels" stage of the senior care field.  That pertains to the stage of the industry it serves as the majority part of its business rather than an emerging stage company.

The company formed a Special Committee back in March and this one has been thought of as a potential takeout candidate or merger candidate as a result.  The company even states its goal is to maximize shareholder value and it believes it is well-positioned to benefit from attractive demographics and strong industry fundamentals.

We just featured Capital Senior Living two weeks ago in our weekly "10 STOCKS UNDER $10" newsletter as "one we think you can hang out in for a couple weeks since we are nearly 60-days into its review of whether or  not it can be bought.  But after the next week or two if no word has come, then take you gain or your loss and we’ll look elsewhere." 

Shares had closed at $8.36 before that and ran up to $8.95 before todays $8.39 close.  Shares are up about 2.5% in after-hours trading at $8.60.  With a $223 million market cap, even a credit crunch and even tighter credit standards allow this one to fall into the "easy realm" of acquisitions for any larger group.  Th real trick will be in making it more profitable.

You can join our open email distribution list to hear about other stories on mergers, reorganizations, IPO’s, secondary offerings, and other key special situations.

Jon C. Ogg
May 29, 2008

Jon Ogg produces and edits the SPECIAL SITUATIONS newsletter; he does not own securities in the companies he covers.

While "old folks homes" might sound derogatory in name, it shouldn’t be thought of that way.  Not at all.  247WallSt.com looks for sectors that we believe can enjoy secular growth.  The oldest of the Baby Boomer generation is just now entering the very first stages of retirement age, and many of their parents are still alive and many are in need of assisted living care.  Combine this with more future demand than current supply can meet, and all of a sudden you have the formula for a secular growth and income story.   

Below is an orderly report calendar for the top stocks in this sector that are reporting earnings this week:

Capital Senior Living Corp. (NYSE: CSU) reports earnings after marketclose today. Estimates from First Call for this quarter are $0.07 EPSon $48.68 million in revenues. Estimates for next quarter are $0.07 EPSon $49.46 million in revenues. Estimates for fiscal Dec-2008 are $0.28EPS on $199.10 million in revenues. Analysts have an average pricetarget of $11.00 and the 52-week range is $6.32 to $11.78. CapitalSenior Living is trading at $8.33 in Tuesday mid-day trading.  As areminder, this one may actually be up for sale and hopefully we’ll hearmore about that today.  Has not yet paid dividend.

Brookdale Senior Living Inc. (NYSE: BKD) reports earnings Wednesdayafter market close. Estimates from First Call estimates don’t lookquite as strong for this retirement home operator. For this quarterestimates are -$0.34 EPS on $481.89 million in revenues. Estimates fornext quarter are -$0.31 EPS on $488.59 million in revenues. Estimatesfor fiscal Dec-2008 are -$1.16 EPS on $1.97 billion in revenues.Analysts have an average price target north of $29.00 and the 52-weekrange is $20.46 to $48.41. Brookdale Senior Living is trading at $26.49in Tuesday mid-day trading.  The company is now just under one CEOrather than a dual CEO structure.  Well off of highs, has a 3.7%dividend yield.

Senior Housing Properties Trust (NYSE: SNH) reports earnings Wednesdaymorning. Estimates from First Call estimates for this quarter estimatesare $0.43 EPS on $50.67 million in revenues. Estimates for next quarterare $0.43 EPS on $55.03 million in revenues. Estimates for fiscalDec-2008 are $1.74 EPS on $224.25 million in revenues. Analysts have anaverage price target north of $23.00 and the 52-week range is $16.22 to$25.21. Today, they announced plans to buy 48 buildings for $565million from HRPT Properties Trust. Senior Housing Properties istrading at $23.40 in  Tuesday mid-day trading.  Stock has a high 5.8%dividend yield right after a 2.5% drop since the company announced itwas acquiring 48 buildings from HRPT Properties for some $565 million.Senior Housings market cap is only $2.2 Billion (may not reflect recentsales).

Sunrise Senior Living Inc. (NYSE: SRZ) reports earnings Thursday aftermarket close. Estimates from First Call estimates for this quarterestimates are $0.29 EPS on $526.56 million in revenues. Estimates fornext quarter are $0.32 EPS on $535.88 million in revenues. Estimatesfor fiscal Dec-2008 are $1.31 EPS on $2.16 billion in revenues.Analysts have an average price target of $20.00 and the 52-week rangeis $16.27 to $42.97. Sunrise Senior Living is trading at $22.29 inTuesday mid-day trading.

No report on nursing homes and elderly care facilities would seemcomplete without the end game company which we will all ultimately beclients of.  Service Corp. International (NYSE: SCI), the funeral andcemetery giant, also reports earnings Wednesday after market close.Estimates from First Call estimates for this quarter estimates are$0.18 EPS on $592.71 million in revenues. Estimates for next quarterare $0.13 EPS on $554.45 million in revenues. Estimates for fiscalDec-2008 are $0.61 EPS on $2.25 billion in revenues. Analysts have anaverage price target north of $14.00 and the 52-week range is $9.30 to$14.50. Service Corp. International is trading at $11.12 in Tuesdaymid-day trading.

Jon C. Ogg
May 6, 2008