Golden Entertainment Could Consider Acquisitions
Backed by a strong equipoise sheet, Golden Entertainment (NASDAQ: GDEN) could live on the prowl for acquisitions.
That’s ace takeaway offered by Deutsche Bank psychoanalyst Carlo Santarelli followers meetings with Golden management this hebdomad at the Global Gaming Expo (G2E) inwards Las Vegas. In a musical note to clients on Thursday, the analyst reiterated a “buy” rating on the Strat operator with a terms target of $46. That implies upside of 35% from stream levels.
We matt-up the tone of voice around potency M&A was a scrap more pronounced, with direction noting that it believes ontogeny via acquisition was a realistic strategy at present, presumption the strength of the equilibrise sheet,” wrote Santarelli.
At the ending of the endorse quarter, Golden had $166 meg inward cash on paw and outstanding liabilities of $735 million. With its $260 zillion sale of the Rocky Gap Casino Resort inwards Flintstone, Md., wrapper upwards before this year, the manipulator directed $175 jillion in proceeds to reducing that debt burden. That strong financial billet could pave the way of life for integration opportunities.
Where Golden Entertainment Could Richard Morris Hunt for Deals
With Rocky Gap out of the portfolio, Golden’s total roster of casinos is set inward Nevada, with properties inward Las Vegas, Laughlin, and Pahrump.
“GDEN noted that any casino M&A would potential follow focussed on geographies westward of Colorado, with single assets or portfolios inward the $30-80 mm one-year EBITDA array existence the likely focus. We believe single plus multiples for assets with real demesne are inward the 8-9x chain of mountains at present,” added Santarelli.
Assuming the analyst’s supra comments involve Centennial State and west, any search for acquisitions past Golden inward that neighborhood would likely live confined to Centennial State and NV because the other states west of Centennial State either don’t allow casinos or get gaming industries controlled past tribal operators.
In its nursing home state, Golden belike doesn’t demand to supply another venue inwards Pahrump, and it could be to a greater extent seller than buyer inward Laughlin because it’s already a leading manipulator there. In terms of big gaming markets inwards the state, that leaves Las Vegas and Reno/Lake Tahoe as possible destinations for deal-making past Golden.
With no exposure to the casino market place there and with the realm rapidly growing and evolving, Reno/Tahoe could be the saint jurisdiction in which Golden could act on bolt-on acquisitions, but the operator hasn’t commented to that effect.
Strat Catalysts
In Las Vegas, the Strat is Golden’s marquise property, and that casino resort hotel has tailwinds, including recent room enhancements, the Las Vegas Grand Prix next month, and the Super Bowl next February.
Santarelli pointed out that the debut of Atomic Golf at the Strat, slated for December, could live an important driver for the property.
“Atomic Golf, which is slated to open in Dec and is placed at the northerly remnant of the dimension next to the northern entranceway to the casino, should follow a nice contributor to GDEN,” concluded the analyst. “Recall, GDEN gets a revenue divvy up from the property, which we trust is inward the mid to richly single-digit pct range, and should also do good from increased footer traffic at the property. In total, we conceive the externalise is likely to append $5-10 mm of incremental holding Earnings Before Interest Taxes Depreciation and Amortization on an yearly basis, as soon as 2024.”
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