Early Friday, Century Casinos (NASDAQ:CNTY) delivered second-quarter outcomes that barely beat Wall Road expectations and whereas that wasn’t sufficient to stop a 3% decline by the inventory, analysts stay upbeat on the title.
In a be aware to shoppers, Stifel analyst Jeffrey Stantial says traders are seemingly trying previous on line casino operators’ year-to-date outcomes, reasonably specializing in the potential for rampant inflation to pinch gaming spending heading into 2023. Nonetheless, he charges Century a “purchase” with a $20 value goal — greater than double the place the shares closed on Aug. 5.
Whereas visibility is restricted, we stay constructive nonetheless given a large low cost to the group (~5x 2023E Adj. EBITDA vs. regional friends 6.5-10.0x),” writes Stantial.
Regardless of the Friday sell-off, Century inventory is increased by 14.31% over the previous month, however it’s down 31.12% and must double to return to its 52-week excessive.
Missouri, Reno Catalysts for Century
The Colorado-based firm is within the midst of working by means of the $195 million acquisition of the Nugget Sparks on line casino. Additionally it is buying a 50% curiosity in the actual property agency that owns the property belongings of that gaming venue. Introduced in February, that transaction marks Century’s entry into Nevada.
When the Nugget Sparks deal is accomplished, Century will function 9 casinos within the US and Canada. The operator’s entry into Nevada in addition to its two venues in Missouri are seen as near- and long-term catalysts for the inventory.
“Administration reiterated $3.6M venture value for the Caruthersville (Missouri) resort, with $2.2M spent to-date (vs. $1.3M at Q1). The property is on observe with an preliminary goal to open this month. Extra impactful, preparations to start constructing the $47M (unchanged) on-shore facility are largely full, as CNTY lately obtained legislative approval to convey its property on-shore,” provides Stantial.
The analyst factors out that within the June quarter, Century’s pair of Missouri casinos contributed to out-performance with modest margin enchancment at its Colorado gaming properties. That quartet of casinos offset a few of the lag on the Mountaineer in West Virginia.
Century Traders Ready on Extra Transaction Information
Coming into 2022, analysts and traders extensively anticipated to be lively on the mergers and acquisitions entrance whereas divesting its two-thirds stake in Casinos Poland. With the Nugget Sparks deal, Century considerably lived as much as the consolidation hypothesis, however geopolitics are getting in the best way of a Poland sale.
The corporate introduced in January 2021 that it’s trying to divest that curiosity, however no deal has been reached. Now, these efforts are being delayed by the Russia/Ukraine battle. Curiously, the conflict in Ukraine is offering help to Century’s Poland operations, however it seems traders may ascribe some premium to the inventory if the agency turns into a North America-only gaming outfit.
“We anticipate this continues to mirror heathy demand publish re-opening, in addition to an inflow of individuals pushed into Poland by the battle in Ukraine. We anticipate traders are persevering with to search for a possible sale right here as administration seeks to place CNTY as a North America solely operator,” concludes Stantial.