The Ardent Leisure Group share price is sinking on Dreamworld reports

Ardent Leisure Group (ASX:AAD) shares have been smashed today over Dreamworld concerns. Should you buy the dip?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It hasn't been a great day for shareholders of Ardent Leisure Group (ASX: AAD). At one stage its share price tumbled almost 6% lower to $2.20 despite there being no news out of the leisure and entertainment company.

Today's decline is likely to be attributable to reports in the News Limited media, which revealed that Ardent Leisure's embattled Dreamworld theme park resembles a "ghost town".

According to the report Dreamworld has struggled to recapture crowds since October's tragic incident despite lowering ticket prices, extending operating hours, and offering free meals for children.

Its loss appears to be the gain of rival Village Roadshow Ltd (ASX: VRL). The report states that its Movie World and Sea World attractions have been extremely popular over the Christmas and New Year holidays.

Is today's sell-off justified?

Well firstly it is worth noting that there are reports elsewhere which contradict the ghost town view and show Dreamworld to be actually quite busy.

Secondly, there certainly is more to Ardent Leisure than just its Dreamworld theme park. As well as its other theme parks and entertainment centres in Australia, there is the exciting Main Event brand in the United States.

I see its Main Event family entertainment centres as the driver of long-term growth for Ardent Leisure and a key reason to invest.

The funds from recent sales of its health clubs division and marina portfolio are expected to be used to accelerate its growth. At present there are 27 Main Event centres in operation and four under construction, with management targeting a total of 200 centres throughout the United States.

As those 27 centres contributed US$174 million to total company revenue in FY 2016, it is clear just how big an opportunity the company has with the Main Event brand.

Time will tell if management can reach its targets, but the early progress it has made has been very encouraging in my opinion. I would suggest investors consider buying Ardent Leisure on its share price weakness.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »