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Bear of the Day: Golden Entertainment (GDEN)

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Golden Entertainment (GDEN - Free Report) is a diverse gaming company offering casino, distributed gaming, and lottery services. The company's gaming divisions include Golden Casino Group, PT's Entertainment Group, and Golden Route Operations.

Analysts have slashed their earnings expectations across the board for Golden Entertainment as of late, pushing the stock into a Zacks Rank #5 (Strong Sell).

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s take a closer look at how the company currently stacks up.

Current Standing

Golden Entertainment has struggled to exceed quarterly estimates, falling short of earnings and revenue expectations in back-to-back quarters. Over the last four quarters, the average EPS surprise is a negative -26%.

Shares faced selling pressure post-earnings following its latest release but have since rebounded, as the chart below illustrates.

Zacks Investment Research
Image Source: Zacks Investment Research

Regarding the latest quarter, GDEN fell short of earnings expectations by roughly 20%. Quarterly revenue totaled $278 million, marginally below expectations and essentially flat year-over-year. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Shares presently trade at a 1.2X forward price-to-sales ratio, a few ticks above the 0.8X five-year median and below the Zacks Consumer Discretionary average. The stock carries a Style Score of “B” for Value.

Zacks Investment Research
Image Source: Zacks Investment Research

The company is forecasted to witness a slowdown in growth in its current fiscal year, with the $1.76 Zacks Consensus EPS estimate indicating a 30% year-over-year pullback in earnings. Still, growth resumes in FY24, with estimates calling for a slight uptick in earnings.

Bottom Line

Negative earnings estimate revisions from analysts and weak quarterly results paint a challenging picture for the company’s shares in the near term.

Golden Entertainment (GDEN - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook over the last several months.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.

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