Fast Cars
International Speedway Corporation (NASDAQ:ISCA) owns a collection of 13 “motorsports entertainment facilities.” In other words, it owns race tracks like Daytona International Speedway Corporation (NASDAQ:ISCA) and Talladega Superspeedway. Its facilities host more than 100 races a year, with 90% of revenues coming from races sponsored by NASCAR.
Like World Wrestling Entertainment, Inc. (NYSE:WWE), International Speedway is a one-trick pony. So demand for racing is a key driver of performance. That’s waned in recent years, hurting revenues and making the renewal of a lucrative broadcasting contract an increasingly concerning issue. The top-line peaked in 2007 at around $800 million and has fallen every year since, sitting at around $600 million last year.
Earnings have been more volatile on a year to year basis, but are less than half of their 2005 peak of around $3 a share. Margins have also collapsed, falling from the low- to mid-30s between 2003 and 2005 to the high teens and early twenties over the last three years.
The negatives now put out there, International Speedway Corporation (NASDAQ:ISCA) is also part owner of Hollywood Casino at Kansas Speedway, one of its properties. Offering gambling at raceways is an interesting way to increase the value of what it offers both customers and investors. As more and more states look to gaming revenues to help boost state revenues, International Speedway Corporation (NASDAQ:ISCA) could quickly turn its facilities into more than just race tracks.
Although this is a turnaround situation, too, the gaming angle could be the catalyst to higher prices. Watch NASCAR demand and gambling trends here. And the mid-20s PE is high, but not outlandish if margins recover.
Men, Who Invests in them?
It’s hard to invest directly in the male entertainment market. World Wrestling Entertainment, Inc. (NYSE:WWE) and International Speedway Corporation (NASDAQ:ISCA) are two notable names in the space that are both out of favor right now. Turnaround investors might find them interesting, as should car and wrestling buffs. Broad based Disney shares, however, are probably a better long-term investment and let you say that you own a piece of ESPN. No one needs to know you also pal around with Minnie Mouse.
The article Money From “Man” Sports originally appeared on Fool.com and is written by Reuben Brewer.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends International Speedway and Walt Disney (NYSE:DIS). The Motley Fool owns shares of International Speedway and Walt Disney. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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