Online gambling gained traction during the first COVID-19 wave, as people turned into online entertainment due to nationwide lockdowns and traveling restrictions. In addition, the easing of restrictions lately has allowed in-person gambling to regain momentum, thanks to substantial pent-up demand.
With the increased use of smartphones and emerging technologies such as blockchain, AI, and virtual reality, it is no surprise that online gambling is becoming mainstream. The global gambling market is expected to reach $876 Billion by 2026, growing at a 3.6% CAGR. Moreover, the global online gambling market is expected to reach $114.4 billion by 2028, growing at a 10.9% CAGR.
Given these factors, it could be wise to bet on quality gambling stocks Golden Entertainment, Inc. (GDEN), Accel Entertainment, Inc. (ACEL), Century Casinos, Inc. (CNTY), Inspired Entertainment, Inc. (INSE), and Monarch Casino & Resort, Inc. (MCRI), which are currently trading at attractive prices because of the broader market correction.
Golden Entertainment, Inc. (GDEN)
GDEN is a diversified entertainment platform operating through four segments: Nevada Casino Resorts; Nevada Locals Casinos; Maryland Casino Resort; and Distributed Gaming. As of February 17, 2022, the company operated approximately 16,900 slots, 120 table games, 6,200 hotel rooms, and 10 casinos.
On May 3, 2022, the Company’s Board of Directors reauthorized a $50 million share repurchase program. This reflects the company’s strong cash flows.
GDEN’s total revenues increased 14.1% year-over-year to $273.64 million in the fiscal first quarter (ended March 31, 2022). The company’s operating income increased 24.7% from the year-ago value to $32.89 million. Its net income grew 239.6% from the year-ago value to $36.07 million, while its EPS increased 220% from the year-ago value to $1.12.
The consensus revenue estimate of $283.76 million for its fiscal third quarter (ending September 2022) represents a marginal improvement year-over-year. The Street expects its EPS to improve at a 15% CAGR over the next five years. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has declined 6% over the past month to close yesterday’s trading session at $43.09.
GDEN’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Value, Sentiment, and Quality. Among the 29 stocks in the Entertainment - Casinos/Gambling industry, it is ranked #5. Click here to see the POWR ratings of GDEN for Growth, Momentum, and Stability.
Accel Entertainment, Inc. (ACEL)
ACEL is a leading distributed gaming operator in the United States. It is involved in the installation, maintenance, and operation of gaming terminals; redemption devices that disburse winnings and contain automated teller machine (ATM) functionality; and other amusement devices in authorized non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores.
On June 1, ACEL acquired Century Gaming, Inc., one of the leading distributed gaming operators in the Western US. With this acquisition, the company is expected to expand its portfolio and business model into new markets.
In the fiscal 2022 first quarter (ended March 31, 2022), ACEL’s revenue increased 34% year-over-year to $196.89 million. Its adjusted EBITDA grew 37% year-over-year to $35.24 million. Its adjusted net income improved 59.2% from the year-ago value to $17.61 million.
Analysts expect ACEL’s EPS and revenue to increase 43.5% and 29.1% year-over-year to $0.26 and $249.70 million, respectively, in the fiscal third quarter (ending September 2022). Over the past month, ACEL has declined 6.6% to close yesterday’s trading session at $10.23.
ACEL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. ACEL also has a B grade for Growth, Value, and Quality. The stock is ranked #2 of 29 stocks in the same industry. Click here to see the ratings of ACEL for Momentum, Stability, and Sentiment.
Century Casinos, Inc. (CNTY)
CNTY is engaged in developing and operating gaming establishments, related lodging, restaurant, horse racing, and entertainment facilities primarily in North America. It has three operating segments: the United States; Canada; and Poland.
On April 1, CNTY acquired 50% ownership in Smooth Bourbon, LLC (PropCo), a property company of Nugget Casino Resort. The acquisition is expected to enhance the company’s free cash flow and be accretive to earnings.
CNTY’s net operating revenue increased 42% year-over-year to $103.10 million in the first quarter ended March 31, 2022. The company’s earnings from operations increased 58% from the year-ago value to $13.05 million, while its net earnings attributable to CNTY improved 115% year-over-year to $218,000. Also, net earnings per share attributable to CNTY rose 120% from the prior-year quarter to $0.01.
For the fiscal second quarter (ending June 2022), CNTY’s revenue is expected to increase 22.3% year-over-year to $112.74 million. Its EPS is expected to increase 81.4% to $1.02 in fiscal 2023 (ending December 2023). CNTY has declined 14% over the past month to close yesterday’s trading session at $7.77.
The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is no surprise that CNTY has an A grade for Value and a B for Quality. In the Entertainment - Casinos/Gambling industry, it is ranked #1 of the 29 stocks.
Beyond what we’ve stated above, we have also given CNTY grades for Growth, Momentum, Stability, and Sentiment. Get all the CNTY ratings here.
Inspired Entertainment, Inc. (INSE)
INSE is a leading B2B provider of gaming content, systems, and solutions for regulated gaming, betting, lottery, social and leisure operators across retail and mobile channels worldwide. The company operates through four segments: Gaming; Virtual Sports; Interactive; and Leisure.
On June 8, the company launched its first iLottery offerings in partnership with Loto-Québec. The new launch adds to INSE’s growing portfolio, and the company might have significant potential growth opportunities in the upcoming months.
On May 23. INSE received an iGaming manufacturer license in Pennsylvania. This is expected to expand the company’s business and increase revenues.
During the fiscal first quarter (ended March 31, 2022), INSE’s total revenue increased 166% year-over-year to $60.60 million. Its adjusted EBITDA rose 418% from the year-ago value to $20.10 million. Net income grew 109% from the same period last year to $1.50 million, while its net income per share came in at $0.05, representing a 106.8% increase year-over-year.
Analysts expect INSE’s revenues to increase 27.6% year-over-year to $266.66 million in the fiscal year 2023 (ending December 2022). Its EPS is expected to increase 143.8% year-over-year to $0.7 in the current year. Over the past month, the stock has declined 8.8% to close the last trading session at $9.79.
INSE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our POWR Ratings system. INSE has an A grade for Sentiment and a B for Growth and Quality. The stock is ranked #4 of 29 stocks in the same industry. Click here to see the ratings of INSE for Value, Momentum, and Stability.
Monarch Casino & Resort, Inc. (MCRI)
MCRI owns and operates various properties, including the Atlantis Casino Resort Spa in Reno, Nevada (the Atlantis); the Monarch Casino Resort Spa Black Hawk in Black Hawk, Colorado, as well as separate parcels of land located next to the Atlantis and a parcel of land with an industrial warehouse located between Denver, Colorado and Monarch Black Hawk.
In the first quarter ended March 31, 2022, MCRI’s net revenue increased 44.5% year-over-year to $108.32 million. Its adjusted EBITDA rose 50.4% from the year-ago value to $34.34 million, while its net income grew 122.2% year-over-year to $18.12 million. The company’s EPS came in at $0.92, representing a 119% year-over-year improvement.
The consensus EPS estimate of $1.06 for the fiscal second quarter (ending June 2022) represents a 14.5% improvement year-over-year. The consensus revenue estimate of $115.56 million for the current quarter represents an 18.3% increase from the same period last year. MCRI surpassed the EPS estimates in each of the trailing four quarters, which is excellent. Over the past month, the stock has declined 14.5%, closing yesterday’s trading session at $58.81.
MCRI has an overall rating of B, which translates to Buy in our proprietary rating system. It also has an A grade for Quality. The stock is ranked #6 of 29 within the same industry. Click here to see the other ratings of MCRI for Growth, Value, Momentum, Stability, and Sentiment.
GDEN shares were trading at $44.16 per share on Wednesday afternoon, up $1.07 (+2.48%). Year-to-date, GDEN has declined -12.61%, versus a -19.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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