Isle of Capri Casinos

Company Description

Isle of Capri Casinos, Inc., together with its subsidiaries, develops, owns, and operates gaming facilities and lodging and entertainment facilities in the United States. It owns and operates 14 casino gaming facilities. The company was founded in 1990 and is based in St Louis, Missouri.

Isle of Capri Casinos Tops Expectations in the Most Recent Quarter

Isle of Capri Casinos beat the Zacks Consensus Estimate in the most recent quarter. In losing three cents, the company beat the Zacks Consensus Estimate of a loss of ten cents. That translates to a 70% beat. The company also outperformed on the top line as well, reporting revenues of $242 million, $8 million more than the Zacks Consensus Estimate. The stock, however, moved lower by 1.6% following the report.

In the last year, Isle of Capri Casinos reported positive earnings only one time. The April 2011 quarter saw revenue of $274 million and earnings per share of $0.22. The Zacks Consensus Estimate was calling for $0.23 so it was a $0.01 miss or 4.4% lower than expected. The stock moved higher the following day by 2.6%.

Isle of Capri Casinos Melted In July 2011

Following the solid report in April of 2011, analysts were expecting the company to remain profitable in calling for $0.07 per share in earnings. The company posted a loss of $0.06, or a $0.13 miss which translates to a 185% negative surprise. The stock traded lower by 2.5% following the report.

Estimates have moved higher

Isle of Capri Casinos has seen its earnings estimates move higher over the last few months. The Zacks Consensus Estimate in January 2012 was $0.07 and has since doubled to $0.14. That significant move has been reflected in the stock price. Since the start of the year ISLE has moved higher by more than 38%.

Valuations

Isle of Capri Casinos has a valuation which might bring out the gambler in aggressive growth investors. With a 73x trailing PE multiple, it is trading roughly three times higher than the industry average of 23x. The forward PE of 46x is double the industry average of 23x, but these multiples can be traced back to the recent lack of positive earnings. The price to book is more of a safe bet for Isle of Capri Casinos, trading at 0.8x or just about half the industry average of 1.5x. Price to sales of .24x is also significantly lower than the 1.5x industry average.

The Chart

A quick look at chart shows how increased earnings estimates can move a stock. As noted above, when estimates increase in a meaningful way, the stock tends to move higher. This is the case for Isle of Capri Casinos which has seen a 38% move since the start of the year. The recent pull back from the mid seven level gives aggressive growth investors an attractive entry point for this gaming stock. Isle of Capri Casinos is a Zacks #2 Rank (Buy).

Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service You can follow him at twitter.com/bbolan1

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