One Reason ClubCorp (MYCC) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of ClubCorp (MYCC) were falling 10.3% to $17.86 Monday after the golf and country club operator announced that it will not convert to a REIT.

The company's board of directors determined a "whole-company REIT conversion is not a viable option today," ClubCorp non-executive chair John Beckert said in a statement.

The board also considered hybrid-REIT structures, but "determined that the financial and operational risks associated with this structure -- such as questionable growth opportunities for each separate company, increased financial leverage, and potential conflicting interests between the companies -- outweighed the limited tax benefits and uncertain valuation benefits of such a conversion," Beckert said.

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ClubCorp also said it expects revenue of about $1 billion for full year 2015, above the Capital IQ Consensus Estimate of $975.57 million.

TheStreet Ratings team rates CLUBCORP HOLDINGS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CLUBCORP HOLDINGS INC (MYCC) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Although MYCC's debt-to-equity ratio of 3.88 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.50, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for CLUBCORP HOLDINGS INC is currently lower than what is desirable, coming in at 26.07%. Regardless of MYCC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MYCC's net profit margin of 1.56% is significantly lower than the industry average.
  • Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, CLUBCORP HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has improved to $27.47 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, and has traded in line with the S&P 500. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
  • You can view the full analysis from the report here: MYCC Ratings Report

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