Century Casinos Selloff Overdone, Free Cash Flow Enticing, Says Analyst

Shares of Century Casinos (NASDAQ: CNTY) joined the broader gaming equity complex to the downside Wed as the Mar meter reading of the Consumer Price Index (CPI) came inwards higher than expected, indicating inflation is proving more relentless than economists hoped.

That concerning economical information dot obfuscated some confirming word pertaining to Century. In a young account to clients today, Macquarie analyst Tchad Beynon upgraded the regional cassino inventory to “outperform” from “neutral” patch maintaining a $5 price target. That implies upside of almost 53% from today’s closure toll at $3.27.

Beynon said the selloff inward the stock, which has seen it drop 32% since the remnant of in conclusion year patch the Russell 2000 Index is upwardly 2% over that time, is overdone.

In the past tense 18 months, OpCos experience traded cut down 1.3x turns to 5.4x (OpCos downwards ~30%), piece WholeCo multiples remained monotonic at 8.9x (WholeCos upwardly 30%). Meanwhile, CNTY shares traded downward from 4.8x to 3.6x (stock down pat(p) 50%), the cheapest OpCo in our reportage creation (vs S&P 500 +38% and Russell 2K +17%),” wrote Beynon.

Due to the fact that it doesn’t possess all of the real acres on which it gaming venues reside, Century is considered an operating accompany (OpCo).

Catalysts Abound for Century Casinos Rebound

With the stockpile currently struggling, there’s increasing belief that Century is a 2025 story, indicating investors may have to be patient with the name.

That forbearance could follow rewarded because the manipulator could generate earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $168 trillion on revenue of $700 million next year, according to Beynon. With that comes the possible action that the manipulator could notch 85 cents a portion inwards free people cash flowing — an telling aggregate for a troupe with a $101 million market place capitalization and a $3.27 apportion price.

Beynon sees Century’s geminate of Show Me State casinos as wellspring as its Old Line State and Reno venues playacting as possible catalysts for the shares.

“Several near-term catalysts, including The Riverview curtain raising (April 4), Polska re-licensing (currently run-rating ~$6m of EBITDA vs ~ $12m prior), and mop up of Caruthersville (4Q24). Moreover, we now anniversary the takeovers of Rocky Gap (July 2023) and Nugget (April 2023), which had some initial learnings,” observed the analyst.

Century Casinos Has Growth, Value Traits

At the last of last year, Century’s leveraging stood at 4.9x, but that’s expected to leap to 5.6x by the finish of this year due to the operator’s MO plans and efforts to wild leek upward the Nugget and Rocky Gap. However, that leveraging ratio could diminution to 4.8x “marking the largest one-year deleveraging inward our coverage,” noted Beynon.

Reducing debt could foster confidence among investors as could strong carrying out at the Free State and Reno properties, which are viewed as intact to the long-term thesis on the stock.

“CNTY is a unique value/growth story with deuce restoration projects that we trust will garner a mid-teens coming back on $82mn spend. In addition, the Nugget and Rocky Gap acquisitions should farther motor medium-term growth,” concluded Beynon.

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