As Christmas approaches, Australians' minds will turn to the holidays.
Many of us will take a week or two off from work sometime between Christmas and the end of January, and a fair proportion of us will end up at a theme park or bowling alley – and that's music to the ears of Ardent Leisure (ASX: AAD) shareholders.
Fun for the whole family
Ardent, which started life as a Macquarie satellite fund, owns and operates the Dreamworld and Whitewater World theme parks in Queensland, as well as the SkyPoint observation deck at the Q1 building on the Gold Coast.
Around Australia, Ardent is the owner and operator of AMF and Kingpin bowling centres, a group of marinas, a chain of health clubs as well as a chain of 'family entertainment centres' in Texas.
If it's fun and costs money, Ardent wants to own and manage it – and really wants you to visit.
A complicated structure
The company has had a strong run since 2004, growing revenue in every year except 2010. Its profits have been somewhat erratic over that time, fluctuating between earnings of almost $50 million in 2007 and a loss of almost $1 million in 2009.
It also hasn't been shy in issuing new securities – having more than doubled that number in 8 years, which has eaten into per-security earnings.
As a stapled security – one Ardent Leisure security is really one share of the management company and one unit in a property trust – the reported earnings don't tell the full story.
Solid performance
Despite fluctuating bottom line profits, Ardent has delivered solid and growing pre-tax earnings over the past four years – almost doubling in that time – and has paid a distribution yield of over 9% in each of the past five years.
The share price has continued to rise over the past 12 months, but the yield is still a trailing 8.2% (though unfranked).
As consumers start to spend again, and if (and it's a big if, at least in the short term) the Australian dollar falls, making overseas holidays relatively more expensive, Ardent stands to benefit from the reversal of some strong headwinds into beneficial tailwinds.
The company does carry a significant debt load, but if it can keep it under control, and continue to grow sales and earnings (and harness whatever macroeconomic benefits come its way), Ardent should be able to continue to turn in a solid performance for investors.
Foolish takeaway
On a trailing price/earnings multiple of only 11.2, Ardent isn't particularly expensive, and with solid (if unspectacular) expectations for earnings growth in the current and next years, Ardent might well be worth a look – or at least some family 'research' at one of its theme parks this summer!
If you only invest in one company this year, make it our "Top Stock for 2012-13." Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.
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Motley Fool analyst Scott Phillips doesn't own shares in any company mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.