4 reasons why the Event Hospitality and Entertainment Ltd share price looks like a BUY

The Event Hospitality and Entertainment Ltd (ASX: EVT) share price has been in a pretty strong downtrend over the past 12 months, but I think now could be a great time for investors to considering buying the shares at a pretty attractive valuation.

Here is why I think this is the case:

1. Exposure to the tourism sector:

Event has a growing portfolio of hotels and resorts which should benefit from the increasing level of inbound and domestic tourism. This business segment did show some weakness in the most recent half, but this was mainly due to short term interruptions as a result of refurbishments and redevelopments. Importantly, the company has a large pipeline of new projects that should underpin earnings growth moving forward. Furthermore, the Threbdo ski resort continues to show good levels of growth on strong increases in visitor numbers.

2. Cinema business expected to improve:

The market was left pretty disappointed with the most recent performance of the cinema division as it was unable to match the exceptional sales generated from Star Wars: The Force Awakens which was released in the prior corresponding half. However, I think investors can expect to see an improvement in sentiment as recently opened cinemas contribute to earnings and the company cycles away from the one-off spike in earnings.

3. Strong balance sheet:

Event has a rock-solid balance sheet with net debt of just $87 million and a net-debt to equity ratio of just 8.5%. Not only does this keep financing costs down, it also means the company will have no issue raising further capital to fund expansion opportunities.

4. Growing dividends:

As the slide below highlights, Event has one of the best dividend records on the ASX with consistent dividend increases over the past 16 years.

Source: Company Presentation

Importantly, analysts are forecasting the dividend to be maintained at 51 cents in FY17 before increasing to 53 cents in FY18. That means investors are currently being offered a pretty attractive fully franked dividend yield in excess of 4%.

Foolish takeaway

Event Hospitality and Entertainment is a market leader and offers an attractive risk-reward proposition for investors who want exposure to the tourism and leisure industry.

The company might be facing a number of short-term setbacks, but I think this makes it a great time for longer-term investors to buy shares at a discounted price.

Event offers a pretty attractive dividend yield, but here is a share that has an even Fatter, Fully Franked Dividend

This company's dividend is almost the stuff of legends. Since it started paying dividends in 2007, it has increased its payout to shareholders every single year, a run that includes 21 consecutive dividend increases.

Based on the last 12-months of dividends, its shares are currently offering a fully-franked 4.8% yield, which grosses up to almost 7% when those franking credits are included. And in stark contrast to the likes of Commonwealth Bank and Telstra, this company just increased its dividend by over 13%, and guided for 2017 profits to grow by 20%!

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Event Hospitality & Entertainment. Motley Fool contributor Christopher Georges 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.

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