Style Scores
The Value Style Score of "D" isn't something that concerns me that much either as I am generally looking for stocks that are not what Value investors are interested in.I normally like to see a Growth Style Score of "A" but RLH is sporing the complete opposite of that with an "F." The Momentum Style Score of "B" is nice to see, but that focusing more on earnings momentum.
One general rule of thumb says that Growth Investors and Value Investors are looking for two distinctly different things. That is why I like to see a big discrepency between the growth and value style scores, but that is not the case for RLH.
One reason for this is that the story is still pretty new and developing. Being a pretty small cap company is also keeping it off many radar screens, but that might soon change.
Description
Red Lion Hotels Corporation owns, manages, and franchises hotels under its Hotel RL, Red Lion Hotel, Red Lion Inn & Suites, GuestHouse International, and Settle Inn brands. As of August 11, 2015, it had 130 hotels. The company was formerly known as WestCoast Hospitality Corporation and changed its name to Red Lion Hotels Corporation in September 2005. Red Lion Hotels Corporation was founded in 1937 and is headquartered in Spokane, Washington.
I wanted to highlight this slide from a recent investor presentation which shows that the company has a current geographic focus in the Pacific Northwest. Some view that as a negative, as it is considered a concentration of assets. I view it as a super huge positive as it shows that there is massive potential for growth. Make no mistake about it, this is a growth story.
Zacks only has estimate data on the last two quarterly reports, so we are not fully loaded on historical numbers. That is not to say I don’t see what was reported back further, it’s just there were no estimates at that time in the Zacks system. The chart at the bottom reflects that only recently has there been coverage on this company that we have our hands on.Earnings History
What I do see is a miss in the March 2015 quarter, but then a big beat in the most recently quarter reported on August 4. The company posted an eleven cent beat of the Zacks Consensus Estimate and that was good for an 84% positive earnings surprise. As a result, the stock traded higher by 9.25% in the session following the earnings report.
The thing that I really like to see is that revenue grew sequentially for the second straight quarter, and both times it has come in above the Zacks Consensus Estimate.
Earnings Estimates
So the picture on the estimates is one that I wanted to show graphically. Take a look at this:
You can see that the 2015 number (on the top) has bounced around, being as low as a loss of 31 cents to a loss of 20 cents. Right now the number is calling for a loss of 23 cents for the year.
What I really like is contained in the next year. The company is now looking at making a gain, and that sort of swing will start getting it on a lot of radar screens. I know the expected number a few months previous to this was a small loss, so there are plenty out there who were expecting this, but this stock is a small one and the story just isn’t being told.
I like the idea of this stock being a big, big winner in 2016, and getting in here while the stock is still below $10 looks to be a great move.
Chart
Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.
By Brian Bolan
- Source: http://www.zacks.com/commentary/56505/bull-of-the-day-red-lion-hotels-rlh#sthash.LwnQBgj5.dpuf
No comments:
Post a Comment