3 Leisure Stocks Pushing Industry Growth

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All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 305 points (1.8%) at 17,666 as of Tuesday, Feb. 3, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,499 issues advancing vs. 614 declining with 98 unchanged.

The Leisure industry as a whole closed the day up 1.5% versus the S&P 500, which was up 1.4%. Top gainers within the Leisure industry included Canterbury Park ( CPHC), up 1.8%, Luby's ( LUB), up 5.7%, Flanigan's ( BDL), up 3.2%, RCI Hospitality Holdings ( RICK), up 2.0% and Morgans Hotel Group ( MHGC), up 1.9%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Morgans Hotel Group ( MHGC) is one of the companies that pushed the Leisure industry higher today. Morgans Hotel Group was up $0.14 (1.9%) to $7.39 on average volume. Throughout the day, 96,120 shares of Morgans Hotel Group exchanged hands as compared to its average daily volume of 84,100 shares. The stock ranged in a price between $7.20-$7.39 after having opened the day at $7.29 as compared to the previous trading day's close of $7.25.

Morgans Hotel Group Co. operates as an integrated lifestyle hospitality company that operates, owns, acquires, develops, and redevelops boutique hotels, nightclubs, restaurants, bars, and other food and beverage venues. Morgans Hotel Group has a market cap of $246.5 million and is part of the services sector. Shares are down 7.5% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Morgans Hotel Group a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Morgans Hotel Group as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on MHGC go as follows:

  • Net operating cash flow has significantly decreased to -$1.70 million or 216.82% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • MHGC has underperformed the S&P 500 Index, declining 6.83% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • MORGANS HOTEL GROUP CO has improved earnings per share by 9.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MORGANS HOTEL GROUP CO continued to lose money by earning -$1.79 versus -$2.14 in the prior year. For the next year, the market is expecting a contraction of 5.0% in earnings (-$1.88 versus -$1.79).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.8%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 1.8% when compared to the same quarter one year prior, going from -$10.33 million to -$10.14 million.

You can view the full analysis from the report here: Morgans Hotel Group Ratings Report

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