Opry 100 And Luke Combs Partnership Will Expand Market Reach And Boost Future Earnings

Key Takeaways

• Strong partnerships and entertainment ventures, including collaborations with high-profile figures, are poised to enhance revenue and expand market reach.
  
• Strategic capital investments and innovative hospitality concepts aim to boost both customer demand and long-term revenue growth.
  
• Continued leisure softness and dependency on group bookings in key markets may introduce volatility and impact revenue growth and cash flows.

Catalysts

Ryman Hospitality Properties, Inc. (NYSE: RHP) is a leading lodging and hospitality real estate investment trust that specializes in upscale convention center resorts and entertainment experiences.

• The company has significant capital investment initiatives nearing completion projected to deliver mid-teens unlevered returns, potentially improving future revenue and earnings.
  
• The introduction and expansion of innovative hospitality concepts, like the repositioned entertainment spaces at Gaylord Rockies and modernization projects at other properties, could enhance revenue through increased demand and customer retention.
  
• The growth strategy with high-profile partnerships, such as with country music superstar Luke Combs for the new Category 10 venue, is expected to drive up entertainment revenues and expand market reach.
  
• Strong group business performance and strategic hospitality bookings for 2025 and beyond, with rate growth making up around 60% of group revenue, indicate potential for revenue and earnings enhancement.
  
• The Opry 100 initiative, including international performances, is designed to boost brand visibility and generate new revenue streams, possibly improving overall earnings in the entertainment segment.

Ryman Hospitality Properties Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ryman Hospitality Properties's revenue will grow by 5.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 14.8% today to 15.0% in 3 years time.
• Analysts expect earnings to reach $406.4 million (and earnings per share of $5.62) by about December 2027, up from $345.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.2x on those 2027 earnings, up from 18.3x today. This future PE is greater than the current PE for the US Hotel and Resort REITs industry at 18.4x.
• Analysts expect the number of shares outstanding to grow by 6.62% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.91%, as per the Simply Wall St company report.

Ryman Hospitality Properties Future Earnings Per Share Growth

Risks

• Continued leisure softness in the Nashville and Orlando markets may impact revenue growth, as these are key hospitality locations.
  
• Ongoing renovations and construction disruptions, particularly at properties like the Gaylord Palms due to labor shortages, could impact operating efficiency and net margins.
  
• Dependency on timely completion of major capital projects poses a risk to cash flows and planned revenue boosts, notably in the entertainment and hospitality segments.
  
• External factors like Hurricane Milton affecting business, alongside the timing of large bookings, can introduce volatility in earnings and projections.
  
• High reliance on group bookings means any downturn in this segment could significantly impact future revenue streams.

Valuation

• The analysts have a consensus price target of $127.67 for Ryman Hospitality Properties based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $136.0, and the most bearish reporting a price target of just $100.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be $2.7 billion, earnings will come to $406.4 million, and it would be trading on a PE ratio of 29.2x, assuming you use a discount rate of 8.9%.
• Given the current share price of $106.75, the analyst's price target of $127.67 is 16.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.