This company, which primarily owns and operates membership-based private golf clubs and as well business, sports and alumni clubs and earns revenue from membership dues, food& beverage, and golf, has been grouped into golf club sector in membership club industry.
It seems that the demand for membership of neighbour golf club in US market has been continuingly increasing in the past three years as indicated by increased same store membership of clubs for some of typical companies (more than 2% annually).
As revenue generally grows as a result of growth in the same stores revenue, companies have seen the improved numbers in their gross margins and thus profit. The typical gross margin is about 17% including depreciation, SG&A is about 8%, and operating margin is about 9% in 2018.
The typical enterprise price/EBI (adjusted with tax field) ratio is 28 and 32 (the acquisition price).
It seems that the demand for golf club of this company has been increasing gradually in 2016 and 2017 as indicated by the growth in same store membership dues. The growth in demand for its other club service seems to be slower than that in its core business – golf club.
The first six months of fiscal 2017 compared with the same period of 2016 (ended June 13 2017)
Net revenue increased 2.8% due to increase of about 2.3% in same store golf club in member fees, food& beverage. The same store business, sports, and alumni club was flat with increase in member fees offset by decrease in food& beverage.
Fiscal 2016 compared with fiscal 2015
Net revenue increased 3.4% due to expansion of business and increase of about 2% in same store golf club in member fees, food& beverage. The same store business, sports, and alumni club increased 1.2% in member fees and food& beverage.
Its gross margin (including direct operating costs and depreciation) was improved in 2017 (to about 17%) and its SG&A as percentage of sales have been flat at around 8%. And this resulted in an improved operating margin of about 9%.
Stock performance
This company is having an enterprise price/EBI ratio of 32 under the acquired price. We think that its stock was overvalued COMPARED WITH SIMILAR COMPANY- BOWL AMERICA INCORPORATED OF RATIO OF 32.
