Century Casinos Inventory Might Have Fallen Too Far Too Quick

Posted on: February 27, 2024, 12:23h. 

Final up to date on: February 27, 2024, 12:35h.

It might take some time for Century Casinos (NASDAQ: CNTY) to reclaim misplaced glory however the sell-off that’s seen the inventory shed greater than two-thirds of its worth over the previous yr is just too punitive.

Century Casinos
The Century On line casino in Caruthersville, Mo. The operator’s inventory has been drubbed, however has rebound potential. (Picture: KFVS12)

That’s the take of Stifel analyst Jeffrey Stantial, who in a brand new report back to shoppers, reiterated a “purchase” score and a $5 worth goal on shares of the regional on line casino operator. That forecast implies upside of 81.1% from the February 26 shut. Stantial not too long ago met with Century Co-CEO & Vice Chairman Peter Hoetzinger, noting a number of necessary takeaways.

Administration is evaluating choices to handle/exploit perceived dislocation in valuation and completion of a license renewal cycle in Poland ought to assist a possible sale,” noticed the analyst.

Colorado-based Century owns about two-thirds of Casinos Poland, and it’s been greater than three years for the reason that firm mentioned it was trying to divest that stake. That effort was delayed by Russia’s invasion of Ukraine in February 2022.

Century Casinos Inventory Selloff Overdone

Down 40.37% yr up to now and practically 70% faraway from its 52-week excessive, Century has been one of many worst-performing on line casino shares relationship again to mid-2023.

A few of that stoop is attributable to elevated competitors in Reno and a slower-than-expected ramp-up interval in Maryland, the operator’s two latest markets. Nonetheless, a case will be made that promoting strain on the inventory is extreme.

“Whereas acknowledging underlying basic headwinds, we imagine latest underperformance & fears of monetary misery are extreme and low cost tapering one-time headwinds & return on development capex. Normalized earnings energy gained’t be evident till FY25, although buybacks/insider purchases could assist help sentiment/valuation extra near-term,” added Stantial.

Century’s fundamentals may very well be boosted within the second half of this yr as enhancements take form at its two Missouri gaming venues and the operator capitalizes on synergies at Nugget Sparks in Reno. The operator’s enhancements at its pair of Missouri casinos might assist in gaining extra traction with mid- to higher-tier shoppers.

Some Century Casinos Headwinds are Momentary

Century not too long ago pre-announced fourth-quarter outcomes that missed Wall Road forecasts however the silver lining is that the downbeat numbers have been largely attributable to short-term conditions, particularly building at its Missouri casinos and at Nugget Sparks.

As buyers understand these conditions aren’t everlasting — and that with a market worth of $88.35 million, Century is being priced by market contributors nicely under the sum of its components — the inventory might generate some near-term upside.

“Placing all of it collectively, commentary all through conferences attended suggests doubtlessly extra pronounced structural headwinds for CNTY vs. some regional friends,” concluded Stantial. “Nonetheless, this seems excessively discounted in CNTY’s present valuation, with a lot of the FY24 Consensus revisions attributable to one-time headwinds. Whereas normalized earnings energy gained’t be evident till FY25, we see some extra near-term catalysts for a possible aid rally.”

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