Century Casinos Deep Value Gaming Idea
Century Casinos (NASDAQ:CNTY), a small-cap regional cassino operator, is next other gaming equities lour inwards recent weeks. But those declines may live chess opening the door to a time value proposition.
That’s the sentiment of Philip Roth Washington analyst Edward VII Engel, who initiates insurance coverage of the Colorado-based gaming manipulator with a “buy” rating and an $18 cost target. That implies upside of to a greater extent than 50 percent from the Jan. 12 close, and the phone call arrives as Century molt 19.7 percent over the past 90 days.
Engel notes Century trades at simply 5x estimated 2023 earnings before interest, taxes, wear and tear and amortisation (EBITDA), indicating the make is deeply discounted relation to peers. Additionally, the operator is making moves to raise some of its regional properties, which could pay off turned for patient investors.
Century is pursuing a $68 jillion expanding upon crosswise its deuce properties inward Missouri, where the company is relocating riverboat trading operations inwards Caruthersville to put down and underdeveloped 75-room hotels contiguous to both MO casinos,” said Engel. “We trust these investments are subject of generating ~20 percent ROIs, implying ~$12 1000000 of incremental EBITDA.”
The analyst adds Century sports a 15 percent give to release cash in flow (FCF), compared to an medium of 10 percent for its most direct competitors.
Expect Scale Through M&A
One of the long-standing points of emphasis for analysts cover Century and those bullish on the shares is the operator’s expected participation inwards gaming manufacture consolidation.
The accompany has a report for scooping upwards regional assets that are no longer wanted past larger operators and external respiration young lifespan into those venues. Management usually aims for a deal every 12 to 18 months, and if that case in point holds true, a transaction could be proclaimed at some gunpoint in the coming months.
“After a moving ridge of industry integration lowest decade, we see an chance for Century to gain smaller assets from manufacture leaders, such as Caesars, Penn, and Boyd,” notes Engel. “By getting unattended assets, Century can dedicate to a greater extent resources to capturing synergies through and through up efficiencies and thinning costs.”
The analyst doesn’t specifically place what casinos those companies could sell to Century. But the operator previously purchased gaming venues from Eldorado Resorts, the unshakable that is now Caesars Entertainment (NASDAQ:CZR).
Engel points out that with the weighing machine Century can establish through acquisitions, it could live the next transformative small-cap gaming stock, connexion a pantheon occupied past the likes of Bally’s (NYSE:BALY), the old Eldorado, and Golden Entertainment (NASDAQ:GDEN).
Century Honing US Focus
Unbeknownst to many investors is the fact that Century is an international operator, with casinos inward Canada, England, and Poland, inwards add-on to its US properties.
However, the keep company is parting with non-core assets inward Canada and England, and is looking to sell its 66.6 percent interest in Casinos Poland.
Engel estimates that dealing could generate $40 meg inward cash, which could live used for Century’s acquisition war chest. Longer-term, the manipulator could get up another $150 zillion by parting with some Canadian assets.