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

Event Hospitality and Entertainment Ltd (ASX:EVT) shares have lost more than 20% during the past year – Here is why now might be a good time to buy.

| 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

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.

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.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

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 »