Century Casinos is Catalyst-Rich Value Idea, Says Analyst
Century Casinos (NASDAQ:CNTY), a small-cap regional casino operator, is next other gaming equities lour inwards recent weeks. But those declines may be opening night the door to a note value proposition.
That’s the sentiment of Philip Roth Capital analyst Albert Edward Engel, who initiates coverage of the Colorado-based gaming operator with a “buy” rating and an $18 price target. That implies upside of more than 50 percent from the Jan. 12 close. The telephone call arrives as Century slough 19.7 percent over the past times 90 days.
Engel notes Century trades at simply 5x estimated 2023 earnings before interest, taxes, depreciation and amortization (EBITDA), indicating the figure is deeply discounted comparative to peers. Additionally, the manipulator is making moves to enhance some of its regional properties, which could pay off off for patient investors.
Century is pursuing a $68 gazillion enlargement crossways its deuce properties inwards Missouri, where the company is relocating riverboat trading operations in Caruthersville to set down and underdeveloped 75-room hotels adjacent to both MO casinos,” said Engel. “We believe these investments are capable of generating ~20 percent ROIs, implying ~$12 million of incremental EBITDA.”
The psychoanalyst adds Century sports a 15 percent buckle under to disengage cash flowing (FCF), compared to an medium of 10 percent for its to the highest degree verbatim competitors.
Expect Scale Through M&A
One of the long-standing points of accent for analysts covering Century and those bullish on the shares is the operator’s expected involvement inward gaming industry consolidation.
The company has a reputation for scooping upward regional assets that are no more yearner wanted past larger operators and eupneic young lifespan into those venues. Management usually aims for a business deal every 12 to 18 months, and if that precedent holds true, a dealings could live proclaimed at some spot inwards the coming months.
“After a wafture of industry integration lastly decade, we escort an opportunity for Century to acquire smaller assets from manufacture leaders, such as Caesars, Penn, and Boyd,” notes Engel. “By getting unattended assets, Century canful dedicate to a greater extent resources to capturing synergies through up efficiencies and slip costs.”
The psychoanalyst doesn’t specifically place what casinos those companies could sell to Century. But the operator antecedently purchased gaming venues from Eldorado Resorts, the house that is at present Caesars Entertainment (NASDAQ:CZR).
Engel points out that with the scale Century canful establish through and through acquisitions, it could follow the next transformative small-cap gaming stock, joining a pantheon tenanted by 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, in add-on to its US properties.
However, the companion is parting with non-core assets inward Canada and England and is looking to sell its 66.6 percent interest group in Casinos Poland.
Engel estimates that the transaction could bring forth $40 1000000 in cash, which could live used for Century’s acquisition war chest. Longer-term, the manipulator could wage increase another $150 one thousand thousand by parting with some Canadian assets.