Goldman Impressed By ClubCorp's Quarter, But Lowers Price Target For Stock

Goldman Sachs analyst Steven Kent is as bullish as ever on ClubCorp Holdings Inc MYCC following the company’s big Q1 numbers. The company topped Goldman’s estimates for both revenue ($215 million) and EBITDA ($42 million) in the quarter.

In a new report, Kent noted five key takeaways for ClubCorp investors:

• 1. Kent credits the company’s O.N.E. program with the 3.9 percent rise in dues revenue at golf and country clubs in the quarter.
• 2. Trends in the all-important Texas markets were strong, with 7.7 percent EBITDA growth in Houston clubs and 10.6 percent growth elsewhere in Texas.
• 3. Kent praises management’s renewed focus on ramping up dues revenue rather than membership counts.
• 4. ClubCorp acquired two additional clubs in Q1 and is dedicated to pursuing clubs that generate 17 percent ROIC.
• 5. Management reiterated fiscal 2016 adjusted EBTDA guidance of $242-252 million.

Related Link: Is A June Rate Hike Good News For U.S. Stocks?

“Given the strong flow through we saw in 1Q (incremental EBITDA margins of ~25 percent) and that 1Q is a seasonally slow quarter, we expect this guidance could be conservative,” Kent added.

Goldman Sachs maintains a Buy rating on ClubCorp but has lowered its price target from $20 to $17.25.

ClubCorp shares are down 35.0 percent so far in 2016.

Disclosure: The author holds no position in the stocks mentioned.