Century Casinos Stock Rally Has More Catalysts, Says Analyst

Grace Seow -

Century Casinos (NASDAQ:CNTY) gillyflower soared 22.12 percent this week after the regional gaming fellowship easy surpassed second-quarter earnings and revenue estimates. That prompted at to the lowest degree 1 analyst to say there’s more upside available with the already red-hot shares.

The Colorado-based manipulator reported adjusted earnings before interest, taxes, wear and tear and amortization of $25.2 billion on clear operating revenue of $92.2 one thousand thousand for the June quarter. Adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or lease costs (EBITDAR) work over the consensus judge past 36 percent.

Century’s telling results underline strength inwards the company’s US operations, because its casinos inward Canada and Polska — two of its marquise international markets — were shuttered for most of the quarter. Its Poland venues reopened in later(a) May, followed by some of its Canada casinos on June 10. The indorsement billet ended on June 30.

CNTY’s international assets were closed in(p) for most of Q2, though initial results post-opening outpaced expectations, piece regional gaming demand in the US remained robust,” said Stifel analyst Jeffrey Stantial in a take note come out Friday. “Strength inwards the consumer, inwards the US and international appears to get continued into July, though visibleness thereafter remains special as savings/stimulus potentially unwind.”

Stantial rates Century a “buy” with a $19 terms target, implying upside of 38.7 percent from the Aug. 6 close. The carry is upwardly 114.24 percent year-to-date.

As is the instance with so many gaming companies, specially regional operators, Century employed cost-cutting measures now following the oncoming of the coronavirus pandemic, leading to substantial margin expansion.

Now, analysts and investors are pondering the sustainability of those moves. In the example of Century, it appears as though the keep company put up operate inwards leaner forge as business organization normalizes. That could follow to the do good of shareholders.

“Management’s commentary on sustainable operating trends was encouraging, as they believe to the highest degree changes made to the operating be construction should prove permanent, with familiarised EBITDA remaining wellspring above pre-COVID levels, even as operations ‘normalize,’” said Stifel’s Stantial.

Century’s namesake venues inwards Cape Girardeau and Caruthersville, Mo. are bolstering the example for the stock. As Stantial notes, second-quarter adjusted EBITDAR at those venues was twofold what it was in the same period in 2019, with slot and table mettlesome volumes at historically in high spirits levels.

Century late landed favorable reception to convey the Caruthersville riverboat ashore, and is planning a large-scale hotel expansion at the venue.

Other Catalysts for Century Stock

With $80.2 billion inwards immediate payment and no more debt maturities before 2026, Century could live a player inwards mergers and acquisitions in the US later this twelvemonth — something analysts get discussed for some time. Those efforts and the company’s cash billet could follow enhanced past the planned sale of its Republic of Poland assets.

“We also insure valuation accretive M&A catalysts (Poland sales agreement near-term; U.S. acquisitions long-term) and an attractive capital deployment chance inward Missouri, which could facilitate re-rate CNTY closer to regional manipulator peers,” adds Stantial.

The analyst says Century is talking with tierce suitors regarding the Poland casinos, and a cut-rate sale testament follow accretive to the operator’s valuation.

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