Posted on: August 7, 2021, 02:11h.
Remaining up to date on: August 7, 2021, 02:11h.
Todd Shriber Learn Extra
Century Casinos (NASDAQ:CNTY) inventory soared 22.12 % this week after the regional gaming corporate simply surpassed second-quarter profits and earnings estimates, prompting a minimum of one analyst to mention there’s extra upside to be had with the already scorching stocks.
Century Casinos’ Cape Giraradeau, Mo. venue. Wall Boulevard is enthusiastic about the inventory. (Symbol: KFVS12)
The Colorado-based operator reported adjusted profits prior to passion, taxes, depreciation and amortization of $25.2 million on internet running earnings of $92.2 million for the June quarter. Adjusted profits prior to passion, taxes, depreciation, amortization, and restructuring or hire prices (EBITDAR) beat the consensus estimate by way of 36 %.
Century’s spectacular effects underscore energy within the corporate’s US operations as a result of its casinos in Candada and Poland — two of its marquee global markets — have been shuttered for lots of the quarter. Its Poland venues reopened in overdue Might adopted by way of a few of its Canada casinos on June 10. The second one quarter ended on June 30.
CNTY’s global property have been closed for many of Q2, although preliminary effects post-opening outpaced expectancies whilst regional gaming call for in america remained powerful,” stated Stifel analyst Jeffrey Stantial in a word out Friday. “Power within the client, within the U.S. and global seems to have endured into July, although visibility thereafter stays restricted as financial savings/stimulus doubtlessly unwind.”
Stantial charges Century a “purchase” with a $19 value goal, implying upside of 38.7 % from the Aug. 6 shut. The inventory is up 114.24 % year-to-date.
Century Inventory Has Sustainable Developments
As is the case with such a lot of gaming firms, specifically regional operators, Century hired cost-cutting measures straight away following the onset of the coronavirus pandemic, resulting in important margin enlargement.
Now, analysts and buyers are thinking about the sustainability of the ones strikes. With regards to Century, it sounds as if as although the corporate can running in leaner model as industry normalizes. That may be to the good thing about shareholders.
“Control’s statement on sustainable running traits was once encouraging, as they consider maximum adjustments made to the running charge construction will have to end up everlasting, with adjused EBITDA ultimate smartly above pre-COVID ranges, whilst operations ‘normalize,’” stated Stifel’s Stantial.
Century’s namesake venues in Cape Girardeau and Caruthersville, Mo. are bolstering the case for the inventory. As Stantial notes, second-quarter adjusted EBITDAR at the ones venues was once double what it was once in the similar length in 2019 with slot and desk recreation volumes at traditionally prime ranges.
Century lately landed approval to deliver the Caruthersville riverboat ashore and is making plans a large-scale resort enlargement on the venue.
Different Catalysts for Century Inventory
With $80.2 million in money and no debt maturities prior to 2026, Century generally is a participant in mergers and acquisitions in america later this yr — one thing analysts have mentioned for a while. The ones efforts and the corporate’s money place may well be enhanced by way of the deliberate sale of its Poland property.
“We additionally see valuation accretive M&A catalysts (Poland sale near-term; U.S. acquisitions long-term) and a gorgeous capital deployment alternative in Missouri, which might lend a hand re-rate CNTY nearer to regional operator friends,” provides Stantial.
The analyst says Century is speaking with 3 suitors in regards to the Poland casinos and a sale will likely be accretive to the operator’s valuation.
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