The coronavirus pandemic continues to weigh on Century Casinos. The company’s casinos in Canada were closed for all of the first quarter and its casinos in Poland were closed for most of the three-month period.
On Friday, just after the Colorado Springs, Colorado-based company reported first-quarter earnings Century announced its Polish casinos would remain closed through June 6, subject to potential extensions.
In some ways, the continued closures in Poland don’t hurt Century, Macquarie Securities gaming analyst Chad Beynon told investors in a research note.
“Management has moved away from the small operations globally and remains adamant about exiting its low-margin Poland operations, once a core segment to the overall business,” Beynon said. “In the meantime, we believe the company has been looking for its next move in the U.S. given its healthy balance sheet.”
Century, which has watched its stock surge for months, posted a dramatically narrower loss for the quarter ended March 31. Loss per share and revenue, though it fell, both topped Wall Street forecasts.
In a statement, Century Casinos, which owns three hotel-casinos and a racetrack in Canada, five casinos in the United States, one casino in England, and its two-thirds stake in Casinos Poland through a subsidiary, said its first-quarter net loss was $1.4 million, or 5 cents per share, for the quarter, compared with a year-earlier net loss of $45.8 million, or $1.55 per share.
The latest result topped the 15-cents-per-share average loss forecast by analysts surveyed by Seeking Alpha.
Earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, rose 53.1% to $14.7 million from $9.6 million.
Revenue fell 17.4% to $72.4 million from $87.7 million but topped the $66.6 million forecast by Seeking-Alpha polled analysts.
“For the third quarter in a row, we have been able to achieve high operating margins and we believe that will continue to be attainable,” Century co-Chief Executive Officers Erwin Haitzmann and Peter Hoetzinger said in the statement.
Haitzmann and Hoetzinger said they expect the company’s Canadian casinos and racetracks to reopen and expect North American summer business to intensify as the pandemic subsides.
Century could get a boost from internet gambling. In April, Rush Street Interactive and William Hill launched online casino platforms in Century Casinos’ Mountaineer Casino in New Cumberland, West Virginia, following approval from the West Virginia Lottery.
Under a partnership deal, Mountaineer Casino gets an undisclosed piece of the platforms’ net revenue and an undisclosed one-time fee, Century Casinos said.
Century Casinos’ shares jumped 3.43% on the earnings news, climbing 42 cents to close at $12.67 Friday on the Nasdaq. The shares have more than doubled in 2021, rising from a $6.18 close on Jan. 4. The shares are up from $4.06 a year ago.
Nevertheless, Union Gaming analyst John DeCree said in an April 8 investors’ note that Century shares are undervalued, and a bargain buy.
“In spite of the sharp recovery to start the year, we still see more upside,” DeCree wrote. “(Century) is still one of the cheapest and most direct ways to play the reopening.”
Union Gaming rates Century Casinos’ stock “buy” with a $15 price target. Decree wrote that the company’s shares, as of April 8, were trading at about 6 times the company’s 2022 adjusted EBITDA estimate, compared with the historical range of 6.5 times to 7 times.
However, DeCree suggested Century Casinos’ shares are still cheaper than rivals’ shares because investors are attaching high multiples to companies with far more online sports better or internet gaming exposure. Century could gain as it wades deeper into these businesses.
Follow Matthew Crowley on Twitter @copyjockey
