The gradual easing of restrictions on in-person casino patronage following solid progress on the vaccination front and growing interest in online casinos have been driving the industry’s growth. The four regional casino markets that track visitation in July reported their strongest visitation numbers since the pandemic's start.
According to the American Gaming Association’s commercial gaming revenue data, U.S. gambling revenue hit $13.65 billion in the second quarter of 2021, up 26.3% from the second quarter of 2019. Furthermore, the global casino industry is expected to reach $159.3 billion by 2027, registering a 3.7% CAGR.
Therefore, we think casino companies Golden Entertainment, Inc. (GDEN) and Century Casinos, Inc. (CNTY) will witness substantial sales growth in the near term. As a result, these under-the-radar stocks have been rated a ‘Strong Buy’ in our proprietary POWR Ratings system.
Golden Entertainment, Inc. (GDEN)
GDEN, which is based in Las Vegas, together with its subsidiaries, owns and operates a diversified entertainment platform in the United States. Casinos and Distributed Gaming are the company’s two operational segments. It had approximately 16,000 slots at approximately 1,000 locations as of March 11, 2021.
In May, one of GDEN’s holdings, The STRAT Hotel, Casino & SkyPod, partnered with Las Vegas’ leading theatrical company, SPI entertainment. With this partnership, GDEN aims to introduce an exciting lineup of productions and residences at The STRAT and to bring a variety of unforgettable entertainment experiences to the venue.
GDEN’s total revenues increased 285% year-over-year to $292.47 million in the second quarter, ended June 30, 2021. The company reported $59.96 million in operating income for the quarter, versus a $61.95 million operating loss in the second quarter of 2020. Its net income came in at $103.01 million, compared to a $78.57 million net loss in the prior-year quarter. Also, the company’s EPS amounted to $3.26 for the quarter, versus a $2.8 loss per share in the same period last year.
Analysts expect GDEN’s revenue to increase 48.4% year-over-year to $1.03 billion in its fiscal year 2021. In addition, the company surpassed the consensus EPS estimates in three of the trailing four quarters. GDEN’s EPS is expected to grow 199.4% in the current year. The stock has gained 140.1% in price over the past nine months and 227% over the past year.
GDEN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GDEN is also rated a B grade for Growth, Value, and Quality. Within the Entertainment – Casinos/Gambling industry, it is ranked #1 of 32 stocks.
To see additional POWR Ratings for Stability, Sentiment, and Momentum for GDEN, click here.
Century Casinos, Inc. (CNTY)
CNTY operates as a casino entertainment company internationally. The Colorado Springs, Colo., concern develops and runs gaming establishments and related lodging, restaurant, horse racing, and entertainment facilities. It operated four ship-based casinos as of March 12, 2021.
In July, CNTY announced that an effort to change the law that requires each casino to be a “floating city” has been successful at Century Casino Caruthersville in Missouri. The company secured the approval from the Missouri Gaming Commission to construct a standard building with at least 2,000 gallons of water beneath the facility. With this approval, CNTY purchased parcels of land and aims to open 36 rooms and other facilities by 2022 to help drive its revenues.
For the second quarter, ended June 30, 2021, CNTY’s net operating revenue increased 155.3% year-over-year to $92.19 million. Its earnings from operations came in at $18.11 million, compared to a $2.11 million loss from operations in the second quarter of 2020. The company reported a $25.24 million adjusted EBITDA , compared to a negative adjusted EBITDA of $1.76 million in the prior-year quarter. In addition, its EPS was $0.22 for the quarter, versus a $0.43 loss per share in the same period last year.
CNTY’s revenue is expected to increase 22.4% year-over-year to $372.48 million in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. CNTY’s EPS is expected to increase 139.5% in the current year. The stock has soared 105.9% in price over the past nine months.
CNTY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. CNTY also has a B grade for Value, Growth, and Quality. In the same industry, it is ranked #3.
In addition to the POWR Rating grades I’ve just highlighted, one can see CNTY’s ratings for Momentum, Stability, and Sentiment here.
GDEN shares were trading at $45.98 per share on Friday afternoon, up $0.02 (+0.04%). Year-to-date, GDEN has gained 131.17%, versus a 19.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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