Golden Leisure Rising Money Stream Impresses Analysts


Posted on: February 20, 2022, 02:32h. 

Final up to date on: February 20, 2022, 02:32h.

Final week, Golden Leisure (NASDAQ:GDEN) reported consensus-beating fourth-quarter income, however some analysts imagine the actual story for the Strat operator is a burgeoning free money circulation (FCF) story that might immediate elevated shareholder rewards.

Golden Entertainment
Golden Leisure’s Arizona Charlies on line casino in Las Vegas. An analyst likes the operator’s money circulation prospects. (Picture: Las Vegas Evaluate-Journal)

On its present free money circulation trajectory, it’s potential Golden will generate roughly $200 million in money this 12 months — greater than 10 p.c of its market capitalization of $1.65 billion — for share repurchases. Within the closing three months of 2021, the on line casino operator purchased again $10.6 million of its inventory. Analysts are inspired by Golden’s money circulation proposition, which is enhanced by the actual fact the operator has no new mission threat — components that might function platforms for elevated shareholder rewards.

Web leverage is ~2.8x with a $15M every year from a NT refinancing to couple with continued FCF from operations. We imagine, post-refinancing, GDEN will speed up buybacks (at present ~$40M remaining on its authorization) and look acutely at dividend issuances,” stated B. Riley analyst David Bain in a word to shoppers.

He charges Golden “purchase” with a $75 worth goal, implying upside of roughly 44 p.c from the Feb. 18 shut. Las Vegas-based Golden operates 10 casinos, 9 of that are in Southern Nevada, together with the Strat.

Golden Proper Gaming Title for Present Local weather

At a time when monetary markets are making clear that worthwhile firms with robust steadiness sheets are in model, Golden may emerge as one of many most popular gaming equities.

That thesis might be bolstered by rising rates of interest and nonetheless persistent inflation — components that usually weigh on firms with poor visibility and flimsy financials. These aren’t attributes that precisely describe Golden Leisure.

“Seen, rising money circulation primarily generated from wholly-owned gaming belongings in Nevada which seize Strip, locals, and hyper-local upside from an ongoing, constructive market dynamic and an intense administration give attention to FCF for an accelerated return of capital to shareholders,” provides Bain. “Total, we imagine the GDEN thesis matches at the moment’s fairness sentiment in search of lower-risk, seen money circulation development.”

Golden’s Nevada casino-resorts are the Strat, Aquarius On line casino Resort and Edgewater Resort & On line casino Resort and the nonetheless closed Colorado Belle. Its venues that cater to locals are Arizona Charlie’s Boulder, Arizona Charlie’s Decatur, Gold City On line casino, Lakeside On line casino & RV Park and Pahrump Nugget Resort On line casino.

Nevada Catalysts

Within the wake of the coronavirus pandemic, the Strat and Golden’s Laughlin venues aren’t all the way in which again to income ranges seen in 2019, indicating that as issues get again to regular in Nevada, the corporate doubtlessly has constructive catalysts forward.

As conventions return and create a spill-over influence to the STRAT, we calculate $15M to $20M of elevated STRAT income,” notes Bain. “Laughlin rated gaming play pushed by an older demographic remains to be off ~10 p.c to fifteen p.c however ought to proceed to normalize (post-vaccine drive/COVID).”

Analysts and buyers additionally just like the power in Golden’s varied companies, together with its gaming route unit (a enterprise the place they set up slot machines in locations like bars, eating places, truck stops, and so on.) and PT’s Leisure.

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