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Luxury casino and resort operator Monarch (NASDAQ:MCRI) (NASDAQ:MCRI) reported results ahead of analysts' expectations in Q4 FY2023, with revenue up 6.3% year on year to $128.2 million. It made a GAAP profit of $0.93 per share, down from its profit of $1.14 per share in the same quarter last year.
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Monarch (MCRI) Q4 FY2023 Highlights:
- Revenue: $128.2 million vs analyst estimates of $118.5 million (8.2% beat)
- EPS: $0.93 vs analyst expectations of $1.02 (8.9% miss)
- Gross Margin (GAAP): 53.9%, in line with the same quarter last year
- Market Capitalization: $1.31 billion
CEO Comment John Farahi, Co-Chairman and Chief Executive Officer of Monarch, commented: “Our net revenue of $128.2 million and adjusted EBITDA of $43.0 million represent 6.3% and 3.4% year-over-year growth, respectively, and were fourth quarter records, as were 2023 full year net revenue and adjusted EBITDA of $501.5 million and $170.8 million.
Established in 1993, Monarch (NASDAQ:MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Casinos and GamingCasino and gaming companies that offer slot machines, Texas Hold ‘Em, Blackjack and the like can enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits-have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casino and gaming companies may face stroke-of-the-pen risk that suddenly limits what they do or where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing casino and gaming companies to adapt to keep up with changing consumer preferences such as being able to wager anywhere on demand.
Sales Growth Examining a company's long-term performance can provide clues about its business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Monarch's annualized revenue growth rate of 15.8% over the last five years was solid for a consumer discretionary business.
Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Monarch's recent history shows its momentum has slowed, as its annualized revenue growth of 12.6% over the last two years is below its five-year trend.
This quarter, Monarch reported solid year-on-year revenue growth of 6.3%, and its $128.2 million of revenue outperformed Wall Street's estimates by 8.2%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Monarch has been a well-oiled machine over the last two years. It's demonstrated elite profitability for a consumer discretionary business, boasting an average operating margin of 22.5%. In Q4, Monarch generated an operating profit margin of 19.8%, down 3.5 percentage points year on year.
Over the next 12 months, Wall Street expects Monarch to maintain its LTM operating margin of 22%.Key Takeaways from Monarch's Q4 Results
We were impressed by how significantly Monarch blew past analysts' revenue expectations this quarter, driven by outperformance in its casino and food and beverage operations. That stood out as a positive in these results. On the other hand, its EPS missed estimates.
The company also announced a quarterly cash dividend of $0.30 per share, payable on March 15 to shareholders as of March 1.
Overall, this was a mediocre quarter for Monarch. The stock is flat after reporting and currently trades at $69.04 per share.
