Sector financial performance:

This company, which primarily develops, owns and operates casino gaming and related hospitality and entertainment facilities in USA, has been grouped into casino sector in gambling industry.

It seems that demand, in US market, for casino and related service of companies in this sector, according to the typical company data, has been weak and slowed down in the past three years. It is probably a reflection in local economy of US as indicated by the fact that there are general decreases in mid-west, south, and mid-Atlantic regions but increase in west in the past several years.

Demand in Macau market started to take off after sluggish 2015 as indicated by some of typical company’s data (17-20% annual growth in revenue in 2017 and 2016).

While slow growth in US domestic, benefiting from cost saving and strong growth in Macau, the average gross margin, from the typical company data, seems to have been improved slightly. The current typical gross margin is about 37% in 2017. The typical operating margin is now at about 15% with a higher SG&A as percentage of sales of about 23% probably as a result of increased marketing spending.

The typical average stock Price/cash flow ratio is 37 ranging from 27 to 50.

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Company performance:

 

It seems that the demand for casino and related service of this company has been stable and the growth has come from its newly opened facility (2015) in south region.

 

The first three months of fiscal 2018 compared with the same period of 2017

 

Net revenue decreased 4.3% due to adverse weather.

 

The fiscal 2017 compared with 2016

 

Net revenue (excluding acquisition) increased about 4.1% primarily attributable to increase in south region.

 

Fiscal 2016 compared with fiscal 2015

 

Net revenue (excluding acquisition) increased about 4.3% primarily attributable to increase in south region.

 

Its gross margin (including depreciation) went down slightly to about 36% in 2018 probably as a result of leveraging of new opened facility. And with improved SG&A as percentage of sales (around 33%), its operating margin has been down to around 4%.

 

Stock price

 

This stock currently has a stock price/sales ratio of 0.6. We think that its stock is being relatively overvalued compared with peer- Pinnacle Entertainment.