Why the Experience Co Ltd share price plunged almost 30% lower today

One of the worst performers on the Australian share market on Monday has been the Experience Co Ltd (ASX: EXP) share price.

In late afternoon trade the adventure company’s shares are down almost 17% to 59 cents. At one stage its shares had drifted as much as 29.5% lower to a 52-week low of 50 cents.

Why have Experience Co’s shares plunged lower today?

This morning Experience Co provided a trading update to the market which revealed that the company has been facing tough trading conditions over the last couple of months.

According to the release, unseasonably adverse weather patterns on the east coast of Australia in March and April have led to a serious downturn in customer bookings.

This adverse and damaging weather included rains in Cairns, Port Douglas, and Mission Beach that the ABC labelled “the worst in a generation”.

Because of the adverse weather Experience Co’s businesses lost a significant number of trading days during the recent quarter.

This ultimately means that sales and earnings before interest, tax, depreciation and amortisation (EBITDA) came in well short of expectations during the March quarter. Similarly, the month of April is expected to be just as weak.

As a result, management has been forced to downgrade its FY 2018 guidance.

It now expects revenue to come in between $127 million and $130 million, compared to previous guidance of $135 million to $140 million.

EBITDA has also been downgraded to between $30 million and $31 million from $35 million to $37 million.

Management has warned that this updated guidance is subject to normal weather patterns returning.

Should you invest?

While this trading update is disappointing, it was out of the control of management and appears unlikely to repeat itself in the future.

Based on its revised guidance I estimate that Experience Co’s shares are changing hands at approximately 18x forward earnings.

I think this means its shares are trading at an attractive level and could be worth picking up once the dust settles. Especially considering the inbound tourism boom Australia continues to experience that should drive solid bookings growth in FY 2019.

As such, I would put it up there with fellow tourism shares Crown Resorts Ltd (ASX: CWN) and Apollo Tourism & Leisure Ltd (ASX: ATL) as ones to consider today.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. The Motley Fool Australia owns shares of EXPERNCECO FPO. 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 Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!