Has International Speedway Hit a Speed Bump?
Short-term attendance hiccups could alter long-term earnings power.
Narrow-moat
ISC reiterated its full-year outlook calling for sales of $680 million-$695 million and earnings per share of $1.90-$2.10, which are in line with our prior $691 million and $1.98 sales and EPS forecasts, respectively. Given that we don’t plan to change our longer-term view on the business and its sustainable demand levels at this time, we don’t plan any material change to our $38 fair value estimate, and view shares as overvalued. Supporting our valuation is average admissions growth of 1%, motorsports related revenue increases of 3%, concession hikes of 1%, and corporate expenses that trail off modestly over time (G&A falls by about 100 basis points over the next decade to 16.2%). Uncertainty remains around the format of the next sponsorship after the Monster contract concludes in 2019, which could alter our valuation depending on structure and duration.
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