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Bear of the Day: Ryman Hospitality (RHP)

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Ryman Hospitality Properties, Inc. (RHP - Free Report) is hoping for a big turnaround in travel in 2021. This Zacks Rank #5 (Strong Sell) is still expected to see negative earnings for the year, however.

Ryman Hospitality Properties is a lodging and hospitality REIT that specializes in upscale convention center resorts and country music entertainment experiences, mostly in Nashville.

It's core holdings include 5 of the top 10 largest non-gaming convention center hotels in the United States which operate under the Gaylord Hotels brand and are managed by Marriott International (MAR - Free Report) .

Those hotels include the Gaylord Opryland Resort & Convention Center, Gaylord Palms Resort & Convention Center, Gaylord Texan Resort & Convention Center and the Gaylord National Resort & Convention Center.

It also is the majority owner and managing member of the joint venture that owns Gaylord Rockies Resort & Convention Center.

It has a total of 10,110 rooms and more than 2.7 million square feet of total indoor and outdoor meeting space.

The entertainment segment includes the Grand Ole Opry, Ryman Auditorium, WSM 650 AM and Ole Red and Circle, a country lifestyle media network it owns in a joint venture with Gray Television.

Extension of the Credit Facility Waiver

On Dec 22, 2020, Ryman announced that it had completed a second amendment to the credit agreement obtained from a consortium of banks led by Wells Fargo Bank, regarding its $700 million revolving credit facility, $300 million Term Loan A facility and its Term Loan B facility, of which about $382.5 million is outstanding.

The second amendment provides for an extended temporary waiver of all financial covenants in the credit facility through April 1, 2022 (unless terminated early by the Company at its option) confirms the continued availability of the undrawn amounts under the revolving credit facility.

“The successful extension of our covenant waiver period, along with the additional financial and operational flexibility provided by the second amendment, will assist us in our efforts to recover from the COVID-19 pandemic and to quickly begin serving our group customers once the COVID-19 vaccine becomes widely available and groups are once again able to travel," said Colin Reed, Chairman and Chief Executive Officer of the Company.

Third Quarter Continued to See Improvement

On Nov 3, 2020, Ryman reported their third quarter results which continued to show improvement as travel increased.

Ryman saw year-to-date through Sep 30, 2020 rebooked room nights of approximately 1.01 million room nights, or over 53% of total room nights canceled as a result of COVID-19.

Their entertainment segment and Ole Red venues also saw improvement in the quarter.

Average monthly cash burn improved in the third quarter, falling to $22.7 million from $31.6 million in the second quarter.

The company said it had about 30 months of liquidity including Gaylord Palms expansion.

2021 Estimates Cut Again

Ryman will report fourth quarter results on Feb 26.

But even with the possibility of more improvement in Q4, the winter COVID-19 outbreak has been hitting travel again.

One analyst has cut his estimate for 2021 in just the last week, pushing the Zacks Consensus down to a loss of $0.22 from a loss of $0.14.

Ryman is expected to lose $3.13 in 2020 so a significant earnings recovery was expected in 2021 as the economy reopened thanks to the roll-out of the vaccine, but estimates are now going the wrong way.

Shares Soar on Recovery Hopes

The hotel REIT stocks, including Ryman, were struggling until November 2020 when Pfizer announced it had a vaccine that worked.

Ryman shares have soared 62% over the last 3 months on the belief that the worst was over for the travel stocks.

But is it?

Ryman is still burning through cash and there is no dividend.

The recovery may not be as quick as everyone believes in travel.

Until there is more clarity, investors might want to stay on the sidelines.

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