International Speedway Corporation Overvalued With High Share Price And Daytona Crash PR Disaster

| About: International Speedway (ISCA)

NASCAR is one of the biggest sports in America thanks to a dedicated base of fans and a great sporting experience. That live experience took a turn for the worse on Saturday night during the Drive4COPD 300 race in the Nationwide Series. The company that owns the racetrack at Daytona, International Speedway Corporation (NASDAQ:ISCA), could see its shares in the spotlight during this trading week.

Over 25 fans were injured in a crash on the last lap of the race. Part of a race car, engine, and tire all went airborne into the stands. This surreal moment was captured on video and is now one of the most talked about events of the weekend. The fence that sustained the impact was built in 2010, a year after a similar accident at Talladega Speedway hurt several fans. An incident at Charlotte Motor Speedway in 1999 killed three spectators when a tire went into the crowd. The Charlotte incident is of particular note, because it shows the possibility of lawsuits from fans.

Much of the Internet buzz has been whether or not fans can file lawsuits. The back of tickets shows a waiver that fans may face injury or death at events. H.A. "Humpy" Wheeler, the former President of Charlotte Motor Speedway, said there will be lawsuits. Back in 1999, there were a total of 50 lawsuits filed in an accident that killed three people. Wheeler said, "If 20 people are injured there will be 25 lawsuits."

NASCAR might have made this PR mess worse by beginning a battle with YouTube, the Google (NASDAQ:GOOG) owned video watching site. A fan who was nearby to the accident uploaded a video of the crash shortly after it happened. NASCAR contacted YouTube and made them take down the video as it claimed ownership of the video.

The video has now been reinstated by YouTube, after the company argued that NASCAR did not own the copyright to the fan made video. If you watch the video, you can see the chaos and panic from the spectators. What the video also unfortunately shows for NASCAR and International Speedway Corporation is the sport can't keep spectators safe.

International Speedway Corporation owns 13 racetracks across the country:

  • Auto Club Speedway
  • Phoenix International Raceway
  • Kansas Speedway
  • Chicagoland Speedway
  • Michigan International Speedway
  • Route 66 Raceway
  • Watkins Glen International
  • Richmond International Raceway
  • Martinsville Speedway
  • Talladega Speedway
  • Darlington
  • Daytona International Speedway
  • Homestead Miami Speedway

The company's racetracks reach 80% of the United States population. Over 930,000 total seats are represented by the racetracks, along with 500 suites. International Speedway also owns Motor Racing NetworkSM and AmeriCrown Service Corporation.

In the company's recent earnings report, fourth quarter and full year revenue was down. In the fourth quarter revenue was $189.4 million, while earnings per share came in at $0.61. Full year revenue dropped to $612.4 million, from $629.7 million in 2011. Earnings per share also dropped to $1.51, versus $1.61 the previous year.

Shares of International Speedway are trading at near 52-week highs. Over the last fifty two weeks, shares have traded between $23.18 and $30.81. Analysts on Yahoo Finance expect the company to post earnings per share of $1.46 in 2013 and $1.59 in 2014. Revenue is expected to climb only 1.2% in 2013 and 2.1% in 2014. The company issued 2013 guidance in the range of $1.35 and $1.55.

Attendance is likely to be down in 2013 as the crash will scare away some fans who want to stay home. Analysts saw the company posting revenue growth of only 1% in 2013. With the likelihood of lawsuits settled out of court coming, revenue could become flat or down from last year. The company also lost three events in 2013 and will only host 55 events at its racetracks. The company's guidance seems high and still represents a price to earnings range of 19.7 and 22.5.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.