On Thursday, JPMorgan maintained a Neutral rating on Ryman (NYSE:RHP) Hospitality Properties (NYSE:RHP) with a steady price target of $104.00. The firm's assessment followed recent investor meetings with Ryman's executive team, including President & CEO Mark Fioravanti and CFO Jennifer Hutcheson. The discussions led to insights into the company's operations and future prospects, as well as affirmations of JPMorgan's full-year EBITDA forecasts for 2024 and 2025.
Ryman's management reported stable trends in group demand and ancillary spending, though they acknowledged challenges in stimulating leisure segment demand, which might be attributed to location-specific factors.
Groups are spending above contractually agreed minimums, and the company bases its out-of-room spend forecasts on historical patterns. The Entertainment segment, particularly the new Ole Red venue in Las Vegas, is experiencing notable strength in food & beverage and retail.
The JW Marriott Hill Country has seen leadership and contract changes that, along with future initiatives like ICE programming, room renovations, and land development, present significant growth opportunities.
While Ryman continues to evaluate potential acquisitions, the company has high standards for value creation and seeks assets that align with the characteristics of its existing portfolio, focusing on tax-friendly and non-unionized markets.
JPMorgan's price target is anchored in a valuation that reflects Ryman's improving same-store growth and easing margin pressures, with shares trading at 12.2x the 2024 estimated EV/EBITDA and 11.5x for 2025.
The target is based on 12.5x the 2025 estimated Hospitality EBITDA, which is close to Ryman's historical forward-year average, and 10x the 2025 estimated Entertainment EBITDA. The firm's stance indicates that the current stock price adequately captures the company's growth trajectory.
In other recent news, Ryman Hospitality Properties has been the subject of financial scrutiny and notable developments. Truist Securities has revised its price target for the company to $130.00, down from $135.00, while maintaining its buy recommendation. This adjustment is based on a reevaluation of Ryman's projected earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted funds from operations (AFFO) per share for 2024 and 2025.
Despite these adjustments, Ryman Hospitality reported strong first-quarter results in 2024. The company achieved record first-quarter results in hospitality Average Daily Rate (ADR), revenue, and adjusted EBITDA, despite facing disruptions. Furthermore, the company successfully completed a $1 billion private placement of unsecured senior notes and repriced its corporate term loan.
These recent developments reflect the ongoing financial dynamics within Ryman Hospitality. The company remains optimistic about its future, maintaining its full-year guidance and planning significant investments in both its hospitality and entertainment segments. As per analysts' expectations, the company anticipates a free cash flow of $500 million to $550 million for 2024, supporting dividends and capital investments.
InvestingPro Insights
As JPMorgan holds a steady view on Ryman Hospitality Properties, real-time metrics from InvestingPro present a nuanced picture of the company's financial health and market performance.
With a market capitalization of $6.21 billion and a P/E ratio that has adjusted to 20.35 in the last twelve months as of Q1 2024, Ryman is trading at a valuation that suggests a balance between its earnings and market expectations. The company's PEG ratio, which stands at 0.69 for the same period, indicates potential for earnings growth relative to its P/E ratio.
InvestingPro Tips highlight that Ryman's stock price movements are quite volatile, which could be a factor for risk-averse investors to consider. However, with analysts predicting profitability this year and the company having been profitable over the last twelve months, Ryman appears to be on a stable financial footing. Moreover, the company's liquid assets exceed short-term obligations, which is reassuring for its financial robustness.
Investors looking to delve deeper into Ryman Hospitality Properties can find more InvestingPro Tips to guide their decisions. With an additional 5 tips available, users can explore further by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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