In this week’s piece we discuss four topics: 1) a rotation from growth to value last week, and what that means for our coverage; 2) healthy U.S. GGR trends in August and thoughts on September; 3) timeshare stocks now seem back in favor, which we’ll discuss, including some LBO math on HGV that we think would seem to support a buyout; and 4) the hurricane forecast and measuring the likelihood of another storm as we’re now over halfway through the Atlantic hurricane season.
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Oil prices seem likely to spike on Monday (9/16/19) following news of the strikes at Saudi oil fields over the weekend. Below we review exposure to rising fuel prices for each of our sub-sectors. The biggest impact is a negative impact to cruise lines.
The U.S. ISM manufacturing PMI has been in a downtrend for the last year, and this week it fell below the key 50 level for the first time since August 2016. In this week’s piece we examine the implications for our coverage by looking at industry stock returns over the last 25 years in relation to when PMI drops below 50 as well as when PMI eventually bottoms.
Current reports indicate Hurricane Dorian is strengthening and could make landfall in Florida as a Category 3 storm on Sunday.
We’ve taken a fresh look at our assumptions for each company now that 2Q earnings season has been digested. Some estimates come up, some come down, and some don’t move as we just changed some of the assumptions with various offsets. Each is detailed below.
In this week’s piece we discuss five topics: 1) poor freight trends as it relates to our coverage; 2) softer U.S. GGR trends in June; 3) VAC’s valuation is near an all-time low versus its prior parent company MAR; 4) recently disclosed buybacks from CCL, and our analysis on why additional buybacks could be limited for at least a couple years; and 5) our thoughts on a possible sale/leaseback transaction at MGM for Bellagio and MGM Grand, and our analysis on what we think this could be worth to the stock. Please click the link above for the full report.
For our Weekly Sho we've recorded a 20-minute video with 36 slides highlighting our current views as we head into another earnings season. The cruise line section begins at 4:03, the lodging section begins at 9:00, and the gaming section begins at 15:40. Enjoy the rest of your weekend!
Our coverage is up 24% YTD, on average, which is modestly outperforming the market. However, our coverage remains 21% below 2018 highs, on average, and also 10% below 2019 highs, on average, all while the market is near an all-time high. Our coverage mostly remains out-of-favor, in our opinion, but we see some opportunities. Within lodging our best idea is VAC. Within gaming our best idea is ERI. And within cruise our best ideas are RCL/NCLH.
In this week’s piece we discuss 1) the reaction after CCL’s results, the read-through to RCL and NCLH, and what we’ve heard from our conversations; 2) some additional thoughts on the ERI asset sales as it pertains to ERI/CZR; and 3) why we think HGV’s stock has materially outperformed in recent weeks. Please click the link above for the full report.
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