Will Dreamworld disaster affect Ardent Leisure?

Key statistics: ASX: AAD

Closing share price 14.12.16: $2.270 52-week high: $2.970 52-week low: $1.712

Most recent dividend: 5.5c Annual dividend yield: 5.51% Franking: 0%

What's new?

The death of four people at its Dreamworld theme park shocked the nation and led to the share price of Ardent Leisure falling from around $2.50 to as low as $1.97.

Although the park has recently reopened, the impact on the company is still unclear.

However, it is Ardent's chain of family entertainment centres in America (Main Event) where its future will be forged and is largely unaffected by Dreamworld following the recent sales of its fitness centre and marina businesses.

Another 11 Main Events will be opened in 2017, adding to the 27 centres already in operation.

Ardent expects that, despite a lot of competition, the number of new centres will grow by 30%-40% a year after that and generate a return on investment of around 30%.

How much Dreamworld hurts Ardent's performance will depend on much attendance falls and how long this might last. For Main Event, it will be how successful its new centres are in a very competitive industry.

HOLD.

Andrew Legget is an analyst at Intelligent Investor.

This article contains general investment advice only (under AFSL 282288). To unlock more stock research and buy recommendations, take out a 15-day free membership.

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