Monarch Casino Sizzles Following Q3 Results, Analyst Sees More Upside

Monarch Casino & Resort (NASDAQ:MCRI) caudex is on a red-hot step today, after the regional gambling casino manipulator reported third-quarter results that easily crush Wall Street estimates. That prompted at to the lowest degree ane analyst to encouragement forecasts on the company.

After the snug of US markets Monday, the Atlantis operator said it earned $1.15 a percentage on revenue of $111.63 million inward the Sep quarter. Analysts expected earnings of 99 cents a share on sales of $101.14 million. As a result of that bullish report, shares of Monarch are up 7.2 percent on above-average loudness in midday trading.

Stifel psychoanalyst Jeffrey Stantial reiterates a “buy” rating on the casino operator, patch lifting his terms direct to $85 from $84. That implies upside of roughly 25 percent from the Oct. 25 close. The analyst says Monarch’s third-quarter results all are the to a greater extent impressive when factoring in challenges in its nursing home market of Reno.

In Reno, MCRI remained the donee of a robust regional consumer (savings, pent-up demand, pocketbook share, etc.), which to a greater extent than offset headwinds from Calif. fires, the NV block out mandate, and short-lived (delta) variant fears,” he said inward a line to clients.

Stantial raised his fourth-quarter, 2022, and 2023 earnings before interest, taxes, wear and tear and amortization (EBITDA) estimates on Monarch by 10 percent, iv percent, and trio percent, respectively.

Black Hawk Boost

While the tertiary quarter wasn’t an light operating surround in Reno, Monarch was able-bodied to offset printing that by right smart of ramping up its namesake venue in Black person Hawk, Colo.

Following real investments by the operator, that locus is I of the to the highest degree high-end structured resorts in a commonwealth with compelling gaming prospects. Last Election Day, Centennial State voters sanctioned the remainder of the $100 crest on tabulate mettlesome wagers, as intimately as the gain of unexampled games, such as baccarat and pai-gow tiles. Analysts believe those moves could lure a higher-end clientele to the state’s casinos, create to a greater extent overnight business, and hold on more of the state’s gamblers nursing home and out from Las Vegas.

“Monarch Shirley Temple Hawk continues to storm considerably, and is already run-rating at a high teens yield on investiture (ROI) by our estimates to a lesser extent than one year later, with several incremental development drivers forthcoming,” adds Stantial.

Monarch spent more than $360 million to enhance the Centennial State venue. Prior to the coronavirus pandemic, the manipulator controlled 17 percent of slots turnover, 23 percent of tabularize hold, and 34 percent of hotel elbow room revenue inwards the Joseph Black Hawk market.

Monarch Has Strong Balance Sheet

Among the reasons Monarch has long been favorite(a) past analysts are the shares trading at discounts relative to peers and the operator’s fort equilibrate sheet.

“MCRI ended the canton with $33 jillion of hard cash for $103 zillion amount liquidity, including a $70 billion undrawn revolver. MCRI used unloosen hard cash flow rate during the billet to make a $24.5 jillion optional prepayment on their term loan,” adds Stantial.

He notes Monarch’s purchase is 0.7x, but the company should live capable to parkway that to a to a greater extent palatable 0.4x. There’s talking that with its declining debt and pristine equilibrate sheet, Monarch could follow a participant in manufacture consolidation o'er the close to sensitive term.

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