Casino entertainment company Century Casinos, Inc. (CNTY - Free Report) and its subsidiaries, own and operate a limited-stakes gaming casino in Cripple Creek, CO and are pursuing a number of additional gaming opportunities internationally and in the U.S. Moving ahead, the company seeks to enter into gaming operations in areas with eye-catching demographic attributes, high population densities, local tourism and/or conventional traffic patterns, with the long-term objective of establishing geographic project diversification.
This Zacks Rank #2 (Buy) company has good prospects and should make a value addition to your portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
What Makes Century Casinos a Solid Choice?
Stock Price Movement: Century Casinos’ shares have outperformed the broader Zacks categorized Gaming industry, over the past one year. While the stock returned 34.3%, the broader industry gained 14.6% in the same time frame. The improvement in employment rate and the rise in tourism numbers in Las Vegas should continue to boost demand at the company’s properties in the region and aid the stock in performing well in the quarters ahead.
Earnings & Revenue Growth: Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects (and stock price gains) for the company in question.
While Century Casinos has a historical EPS (earnings per share) growth rate of 86.7%, compared with the industry average of 29.8%, investors should really focus on its projected growth. Here, the company is looking to grow at a rate of 47.4%, thoroughly crushing the industry average, which calls for EPS growth of just 20.3% in comparison.
Propelling the earnings forward is the company’s solid revenue growth story. Notably, the projected sales growth for the current year is 8.5%, which is higher than the broader industry’s estimate of 5.8%.
Valuation Looks Rational: Century Casinos has a Value Style Score of ‘A’, under our style score system. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount.
The company currently has a trailing twelve months PE ratio of 20.60, whereas the industry’s average is a negative 38.30. Thus, while the industry is experiencing negative earnings, Century Casinos’ financial health seems much better.
Additionally, Century Casinos has a forward PE ratio (price relative to this year’s earnings) of just 13.71, so it is fair to say that a slightly more value-oriented path may be ahead for Century Casinos stock in the near term too.
Looking at the sales, the company is currently trading at a P/S ratio of 1.36, lower than the industry average of 2.86. Some people like this metric more than other value-focused ones because sales are harder to manipulate with accounting tricks than earnings.
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so it can give a more accurate picture of the financial health in a business. Century Casinos has a P/CF of 10.24, lower than the industry’s average of 16.05.
All these ratios deem the company undervalued in comparison with its industry peers and thus indicate a good time to buy.
Estimate Revisions: Over the past 60 days, current quarter and current year earnings estimates have moved up by 40% and 27.3%, respectively. The positive earnings estimate revisions indicate analysts’ confidence in the stock and also adds to the optimism. Further, for full-year 2017, EPS and sales are expected to grow a solid 47.4% and 8.5%, respectively.
Other Stocks to Consider
Other favorably-ranked stocks in the sector include Intrawest Resorts Holdings, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Pinnacle Entertainment, Inc. (PNK - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Intrawest Resorts Holdings’ fiscal-2017 earnings climbed nearly 26%, over the past 60 days. Moreover, the trailing four-quarter average earnings surprise is a positive 8.71%.
Royal Caribbean’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 22.26%. Further, for 2017, EPS is expected to grow 15.4%.
The Zacks Consensus Estimate for Pinnacle Entertainment’s full-year 2017 earnings climbed more than 100% over the last 60 days. Further, for 2017, EPS is expected to increase in excess of 100%.
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