Shares in entertainment and leisure conglomerate Village Roadshow Ltd (ASX: VRL) continue to come under pressure following the Chairman's address at its Annual General Meeting (AGM) last Thursday.
Australia's leading theme parks operator has shed over 10% in value since its AGM, as concerns over attendance numbers at its theme parks cloud future earnings.
However, with Village's shares currently plumbing multi-year lows, and the remainder of its key businesses performing to plan, I believe the stock is a buy for long-term investors.
AGM announcement
Robert Kirby, Village's long-serving Chairman and heir of founder Roc Kirby, fronted investors in Melbourne last Thursday to provide an update on the operational performance of Village's 2017 first quarter at its AGM.
Theme parks
As expected, Robert Kirby provided an inconclusive update on the impact of the tragedy at the Ardent Leisure Group (ASX: AAD) owned Dreamwold theme park on Village's theme parks.
This implies that it's still too early to determine the financial impacts for Village, given inconsistent trade following the tragic accident in late October.
Cinema exhibition
Kirby did, however, provide a more meaningful update for Village's flagship Cinema Exhibition division.
Village reported a strong start to 2017 in its Cinema Exhibition business, buoyed by the performance of blockbuster titles Finding Dory, Suicide Squad and Secret Life of Pets.
With management optimistic that the upcoming product line-up for the year (Rogue One: A Star Wars Story, Fantastic Beasts & Where to Find Them and The Lego Batman Movie) should perform well at box-offices, Cinema Exhibition remains poised to deliver a strong 2017 result.
Though, this seemingly wasn't enough to prevent the sell-off in its shares.
Company outlook
Although Village's theme park performance remains a worry, investors must remember that earnings from this division only represented 31% of net profit after tax in 2016 for the group.
Whilst I acknowledge this is a sizeable chunk of earnings, Village currently trades on a trailing price-earnings of about 14x which is slightly below embattled peer Ardent Leisure.
This, to me, indicates the market foresees no improvement to traffic numbers in the years to come, given Ardent's share price is arguably pricing in the permanent closure of Dreamworld.
Accordingly, with Village's theme parks remaining open and its other business units performing solidly, I think investors need to reconsider this forgotten entertainment behemoth.
Foolish takeaway
Admittedly, Village's theme parks could take a hit this financial year as a result of the tragic fatalities at Dreamworld. Whilst this may lead to lower profits, investors must remember that Village is not a one-trick pony. Village operates a diversified mix of film production, cinema and leisure assets meaning its core business (of providing entertainment) should be somewhat insulated by a slowdown in theme park attendance numbers.
Therefore, given the stock trades on cheap multiples, benefits from the tailwinds of inbound tourism, and offers investors an attractive 6.3% yield (fully-franked), I think it's a buy today.
