Why the Village Roadshow Ltd share price has been CRUSHED today

It certainly hasn’t been a great start to the week for the Village Roadshow Ltd (ASX: VRL) share price.

In morning trade the entertainment company’s shares have fallen a massive 11% to $3.57 following a less than impressive trading update for its theme parks.

According to the release Village Roadshow’s Theme Parks division has continued to be impacted by the tragedy at Ardent Leisure Group’s (ASX: AAD) Dreamworld theme park, as well as cyclonic weather conditions in March and April.

For the nine months to 31 March, total attendance for its Gold Coast theme parks has fallen 9.4%. Furthermore, the company revealed that during March its membership renewals also declined, potentially pointing to further attendance declines later this year.

As a result management expects earnings before interest, tax, depreciation and amortisation, excluding material items in the division to be between $55 million and $65 million. This will be a sharp drop from the $88 million of EBITDA the division posted in FY 2016.

But despite the short-term pain, management remains confident that in the long-term the division will return to normal thanks to key marketing campaigns and the introduction of new attractions.

Should you buy the dip?

While my turnaround pick in the space is Ardent Leisure, I do think Village Roadshow could provide strong long-term gains for patient investors.

Although it is taking time, I expect the theme park industry will recover in full in the next 12 to 24 months. Especially with inbound tourism growing strongly.

While it is worth remembering that things could still get worse before they get better, I still feel this could be an opportune time to snap up shares in Village Roadshow.

Finally, unlike Ardent Leisure and Village Roadshow, these high-flying blue-chip shares are at the top of their game right now and delivering stunning earnings growth. I think they would be great additions to most portfolios.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

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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.

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