Barron's Says Gaylord Entertainment (GET) Could Rise 500%
This weekend's Barron's had an extremely bullish piece on Gaylord Entertainment (NYSE: GET). Gaylord Entertainment is the owner of Gaylord Hotels, a leading force in the convention industry and Nashville's famed Grand Ole Opry. Gaylord Entertainment's stock has tanked this year, falling over 90% from its August 2007 high. While stocks in the hotel sector suffered this year, Gaylord has fared the worst.
Barron's thinks Gaylord Entertainment is undervalued and the shares are worth closer to $50 a share and if management can't do better, an acquirer probably will.
In August, Gaylord Entertainment adopted a poison-pill provision that effectively limits any investor's stake to 15%. This has angered large shareholders, including TRT Holdings and Mario Gabelli's Gamco Investors, who would both like to accumulate more shares than the 15% threshold. Gaylord says the provision is the right thing to do because a competitor looking to acquire Gaylord should pay a premium instead of buying GET shares on the cheap.
Gabelli said he would like to buy up to 30% at around $9 a share because Mario is certain that he and his investors will make "three times our money or more."
Despite the short-term downturn, Barron's says Gaylord Hotel franchise has a lot going for it, such as, an extremely powerful brand-name among meeting planners. The CEO is said he is "reasonably confident, providing the world doesn't continue to deteriorate, that our business will perform pretty well overall, but very well compared with the people with whom we compete."
Gabelli's analyst assigns a $48 a share value to the company. He achieves that valuation by assigning a 12 multiple to the $238 million cash flow he expects for 2010, and attaching a 6 multiple to the $20.7 million in cash flow expected by Opryland and other attractions and he then subtracts debt and other payments.
Given all the above information, Barron's says Gaylord shares are deeply undervalued, trading at less than 8 times 2010 cash flow, compared with the stock's more normal 12 to 13 times. Even after a recent rise in Gaylord's stock, a reputable analyst thinks Gaylord is trading approximately 80% below the value of its businesses.
Subscribe to EasyStockAlerts.com & Get real-time e-mail alerts when news hits your stocks!
Gaylord Entertainment Company (Gaylord) is a hospitality and entertainment company that owns and operates Gaylord Hotels, its network of meetings-focused resorts and the Grand Ole Opry (www.opry.com), the weekly showcase.
Create E-mail AlertRelated Categories
Insiders' BlogStocks Mentioned
-0.39Related Entities
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
