On Friday, Stifel reaffirmed its confidence in Century Casinos (NASDAQ:CNTY), maintaining a Buy rating and a $5.00 price target for the company's stock. This endorsement follows a series of investor meetings led by Century Casinos' Co-CEO & Vice Chairman, Peter Hoetzinger.
The discussions revealed several positive developments for the gaming company. The initial response to the new land-based Caruthersville casino has surpassed expectations, suggesting a potential rise in return on investment targets. With annual revenue of $582 million and a gross profit margin of 43%, the company has shown its operational capability. Additionally, the Nugget casino's profit margins have stabilized after a recent change in general management, with future revenue growth expected to be bolstered by group and convention bookings for fiscal years 2025 and 2026.
Interest in purchasing Century Casinos' non-core assets in Poland has also seen a resurgence. This comes after the company successfully completed the re-licensing process for these assets. The stock has seen a significant rise, increasing by 85% over the past eight weeks, although it is still down 44% over the past two years. The completion of the Caruthersville expansion, the re-licensing in Poland, and improvements in Nugget's margins reported in the third quarter have all contributed to a more optimistic view of the company's earnings potential.
Despite these positive signals and the recent uptick in share price, Stifel notes that Century Casinos' valuation remains reasonable when compared to its peers. The firm anticipates that improvements at Caruthersville and Nugget could lead to earnings surpassing the consensus estimates.
InvestingPro analysis reveals that the company faces some challenges, including significant debt levels and cash burn concerns. For a complete analysis of Century Casinos' financial health and access to 12 additional exclusive ProTips, consider subscribing to InvestingPro's comprehensive research platform. Stifel's current model and price target remain unchanged, as the firm reiterates its Buy rating on the stock.
In other recent news, Century Casinos has seen significant developments, including a shift in stock rating and the completion of a major facility. The company received an upgrade from JMP Securities, moving from a Market Perform to Market Outperform rating. This upgrade comes as Century Casinos completed a land-based facility in Caruthersville, Missouri, marking the end of a cycle of mergers, acquisitions, and refurbishments across its U.S. portfolio.
JMP Securities predicts a positive financial outlook for Century Casinos, anticipating the company's leverage to peak in the third quarter of 2024. The firm expects Century Casinos' continued focus on execution to lead to EBITDAR growth in the medium term, with free cash flow projected to reach $83 million from 2024 to the 2026 estimate.
Recent earnings reports show a slight decrease in Century Casinos' net revenue and adjusted EBITDAR in Q3 2024, with net revenue reported at $156 million, a 3% year-over-year decrease. Despite this, the company noted an improvement in EBITDAR margin and expressed optimism for future growth, primarily due to the reopening of their Polish casino and the launch of the new Missouri establishment.
The company's East segment saw a 7% revenue increase, while the Midwest segment's revenue remained consistent. Century Casinos is also considering stock buybacks, with an existing resolution allowing for $15 million in share repurchases.
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