With the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) down just over 1% by midday after a weak session on Wall Street overnight there are plenty of stocks in the red today however the more than 11% plunge in the share price of Ardent Leisure Group (ASX: AAD) isn't just due to market wide falls.
Rather, Ardent's share price slump is in response to a first quarter trading update that has accompanied the group's annual general meeting (AGM).
Somewhat puzzlingly, the trading update reported solid numbers however presumably the positive results failed to meet the market's high expectations.
Here's what investors have learned…
- Group revenues for the quarter are up 19% to $166 million.
- Earnings before interest, tax, depreciation and amortisation for the quarter are up 9% to $37 million.
- The roll-out of Main Event venues continues to gather pace with seven new centres scheduled to open in the second half of financial year (FY) 2016 and a further eight centres in FY 2017. This will bring the total number of venues to 35.
- A substantial improvement in sales and member attrition across the Goodlife portfolio has delivered significant membership growth with the shift to a 24/7 operation timetable a key factor. Currently, 45 clubs are scheduled to be operating on a 24/7 basis by July 2016.
- Theme Parks and Bowling both recorded impressive revenue and earnings growth.
- Marinas were negatively impacted by redevelopments.
What now
Compared with its peers Village Roadshow Ltd (ASX: VRL) and Amalgamated Holdings Limited (ASX: AHD) over the past 12 months Ardent has been a standout for its underperformance. In fact, while Village and Amalgamated have seen share price rises of 5% and 38% respectively, Ardent's share price has fallen around 17%.
With all three companies exposed to the benefits of a lower Australian dollar which is enticing more tourists to visit Australia, there is a positive tailwind across the entertainment and leisure sector. Current share price weakness could create a buying opportunity for alert, long-term investors.
