After soaring more than 23 percent this week, Century Casinos (NASDAQ:CNTY) is up 106 percent…
Posted on: August 7, 2021, 02:11h.
Final up to date on: August 7, 2021, 02:11h.
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Century Casinos (NASDAQ:CNTY) inventory soared 22.12 % this week after the regional gaming firm simply surpassed second-quarter earnings and income estimates, prompting at the least one analyst to say there’s extra upside accessible with the already scorching shares.
Century Casinos’ Cape Giraradeau, Mo. venue. Wall Avenue is happy in regards to the inventory. (Picture: KFVS12)
The Colorado-based operator reported adjusted earnings earlier than curiosity, taxes, depreciation and amortization of $25.2 million on internet working income of $92.2 million for the June quarter. Adjusted earnings earlier than curiosity, taxes, depreciation, amortization, and restructuring or hire prices (EBITDAR) beat the consensus estimate by 36 %.
Century’s spectacular outcomes underscore energy within the firm’s US operations as a result of its casinos in Candada and Poland — two of its marquee worldwide markets — have been shuttered for many of the quarter. Its Poland venues reopened in late Might adopted by a few of its Canada casinos on June 10. The second quarter ended on June 30.
CNTY’s worldwide belongings have been closed for many of Q2, although preliminary outcomes post-opening outpaced expectations whereas regional gaming demand within the US remained sturdy,” mentioned Stifel analyst Jeffrey Stantial in a observe out Friday. “Energy within the client, within the U.S. and worldwide seems to have continued 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 Tendencies
As is the case with so many gaming firms, significantly regional operators, Century employed cost-cutting measures instantly following the onset of the coronavirus pandemic, resulting in vital margin enlargement.
Now, analysts and buyers are pondering the sustainability of these strikes. Within the case of Century, it seems as if the corporate can working in leaner trend as enterprise normalizes. That may very well be to the good thing about shareholders.
“Administration’s commentary on sustainable working traits was encouraging, as they imagine most adjustments made to the working value construction ought to show everlasting, with adjused EBITDA remaining properly above pre-COVID ranges, at the same time as operations ‘normalize,’” mentioned 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 these venues was double what it was in the identical interval in 2019 with slot and desk recreation volumes at traditionally excessive ranges.
Century not too long ago landed approval to convey the Caruthersville riverboat ashore and is planning a large-scale resort enlargement on the venue.
Different Catalysts for Century Inventory
With $80.2 million in money and no debt maturities earlier than 2026, Century may very well be a participant in mergers and acquisitions within the US later this 12 months — one thing analysts have mentioned for a while. These efforts and the corporate’s money place may very well be enhanced by the deliberate sale of its Poland belongings.
“We additionally see valuation accretive M&A catalysts (Poland sale near-term; U.S. acquisitions long-term) and a beautiful capital deployment alternative in Missouri, which may assist re-rate CNTY nearer to regional operator friends,” provides Stantial.
The analyst says Century is speaking with three suitors relating to the Poland casinos and a sale will probably be accretive to the operator’s valuation.
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