Lots of media attention has been shown the housing slowdown in America, one that’s continued for over a year now. It was only a matter of time before certain industries really felt the pain. I’m sure it will continue in the coming summer months as parents struggle to figure out what they should do with the kids now that a boating trip to Lake Tahoe is out of the question.
The Big Picture ran posts yesterday and today pointing out the industries most affected by a housing slowdown and the two that caught my attention were airlines and recreational boating. Brunswick (BC) came out with their first quarter report today and to no one’s surprise, it wasn’t very good. However, they did reaffirm their full-year earnings estimate of between $1.65 and $2.00 per share. Even though the company’s boat division faces a double whammy - lower home prices translate to less equity available for potential customers to borrow against to buy those boats and rising gas prices reduces ones desire to maintain this expensive purchase - it’s still got some gas in the tank thanks to strong brand names across all the segments. In addition, airlines in the past week apparently have seen extremely weak domestic bookings, a sign that most Americans have chosen to stay closer to home for their holidays.
Two companies to consider that will benefit from people staying put are Six Flags Inc. (SIX) the operator of regional amusement parks and Regal Entertainment Group (RGC), the movie chain. Parents, unable or unwilling to spend the money to vacation out of town will do the next best thing and take them to amusement parks for day trips, as well as purchasing season passes for the kids to use throughout the summer. That covers the days. At night, they’ll drop the children at the local movie theater and head to the mall for beer and pizza.
Of the two companies, Regal is definitely in better shape financially. Today, they reported first quarter results and revenues as well as operating income were both very healthy. Executives are optimistic heading into the important summer box office. Six Flags doesn’t report first quarter earnings until May 9 but this morning they gave an initial peek at what’s to come and it too was positive. However, their situation is much more tenuous as they stick handle through a mountain of debt, an impatient shareholder (Dan Snyder, Washington Redskins owner), and a change in focus from teenagers to families with kids. Yes, the focus has changed but teens will still visit Six Flags parks this summer, with or without mom and dad.
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