Tracy, My investment club bought 200 shares at $24.75 in April of 1996, with a 12 month price target of $30. We bought 50 more in the fall of 96 at $20.
I have little clue of what moves this stock. I do know that about 80% of the floating stock is owned by institutional investors, who may be trying to unload in order to shift money to a hotter sector. Another possible reason is the LDRY met published earnings estimates but failed to meet the whisper earnings estimate. (The theory that one estimate is published for the public, while the real more accurate estimate is "whispered" to more important institutional clients.) But that's only speculation.
What I do know is that Tillman Fertitta is a very competent CEO and that Landry's is one of the most respected restaurant chains (outside of Wall Street.) Right now, 8 analysts claim strong buy, 5 analyst claim hold (which basically means sell.)
The restaurant sector has tremendously underperformed the broader market over the past year, with P/E falling across the board. Unfortunately, the restaurant industry is very fragmented with bad news for some restaurants not necessarily portending anything for another restaurant.
It always sucks to hold a stock that been taking a nose dive, but that's the price you pay for long term gains. Nothing has fundamentally changed with LDRY. I expect perhaps some insider buying to take advantage of this price weakness, and maybe some analyst upgrades based on short term price appreciation alone.
Why continue to hold?
The company is as fundamentally sound as ever, the sales growth is continuing on track. Debt is low, management is making the right moves. Demographically, people continue to eat out more, preferring healthier seafood cuisine at moderate prices. Landry's restaurant are classy, yet well priced. Restaurant managers are well trained. Right now, the stock is unfavored by the "street", but they are a fickle crowd, known to change directions like a herd of geese. I say just hang on to a quality company trading at such a low valuation compared to its growth rate. At a forward P/E of 17 for a company with a 5 year estimated growth rate of 30%, LDRY is solid. If I were you, I'd pick up some when the stock shows more price strength.
What are your thoughts, anyone?
Sincerely,
Ben Munoz
Stanford, CA |
