Century Casinos Could Be Star Among Regional Casino Stocks

With newly acquired venues joining its portfolio, Century Casinos (NASDAQ: CNTY) could post significant earnings growth over the next two years.

That’s the call from B. Riley analyst David Bain who, in a note to clients Monday, reiterated a “buy” rating and $13 price target on the Colorado-based regional casino operator. That price forecast implies upside of 53.8% from today’s closing print.

Bain acknowledges that he reduced his fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) estimate on Century by about 15% to account for a multiweek closure at the operator’s Caruthersville, Mo. casino hotel. He also noted the temporary space at that venue performed well.

During 4Q22, Caruthersville was closed several weeks prior to CNTY opening a temporary land-based facility ahead of its new full new land-based casino hotel. The temporary facility’s GGR has been up Y/Y since opening and CNTY’s overall portfolio January trends have been relatively strong, according to checks,” wrote the analyst.

The operator is spending $51.9 million to spruce up the Caruthersville venue. Century Casinos Caruthersville is the last riverboat casino in Missouri, and last year received approval from the Missouri Gaming Commission to come ashore. It’s one of two gaming venues in the state operated by Century, with the other being in Cape Girardeau.

Reno, Rocky Gap Could Boost Century

Century Casinos was acquisitive in 2022, paying $195 million for Nugget Sparks casino and a 50% interest in the real estate company that owns the gaming venue. Later, it did a $56 million deal for the operating rights to the Rocky Gap Casino Resort in Flinstone, Md.

This year will be the first full calendar that the venues are part of the operator’s portfolio. That could stoke some EBITDA growth for the small-cap gaming company.

“Our CY23E/CY24E EBITDA growth is 40%/23% as CNTY folds in acquired Reno and MD operations along with associated improvements, including to the slot floor (Reno, MD), game mix (Reno, MD), loyalty club (Reno, MD), façade (Reno), F&B (Reno) and synergies,” added Bain.

The Nugget Sparks acquisition could prove particularly fruitful for Century. That’s because it marks the operator’s entry into Nevada and also because the Reno market is growing, offers favorable demographic trends, and the venue won’t require an expensive overhaul.

Century Casinos Could Pursue More Deals

Neither Bain nor the company confirmed as much, but given the operator’s documented history of smart, bolt-on deals, that could pave the way for another acquisition in 2023.

That thesis is bolstered by Century’s recent departure from Bermuda and the possibility that it could finally offload its Casinos Poland stake to raise cash for a domestic purchase.

Additionally, some larger operators with regional portfolios could be compelled to unload what they view as lagging venues — properties Century has a penchant for picking up and turning around. Shares of Century are already up 20.20% year-to-date.