Sector financial performance:

This company, which primarily develops and operates integrated resorts earning revenue from casinos, accommodation, food, and retail, 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.

More about this industry

Company performance:

It seems that the demand for casino gaming service and related service of this company in the past year has been growing quickly since 2015 as indicated by its organic revenue increase. The increase has primarily come from Canada and Poland.

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

Net sales increased 11.6% attributable primarily to increase in casino including 11.5% in Canada and 20% in Poland.

The fiscal 2017 compared with 2016

Net sales increased 10.7% attributable primarily to increase in casino including 15% in Canada and 9% in Poland.

Fiscal 2016 compared with fiscal 2015

Net sales increased 4% attributable primarily to increase in casino including 11% in Canada and 5% in Poland.

Its gross margin (including depreciation) has gone down from 44% of 2015 to 42% in 2018. And in addition to increased SG&A as percentage of sales (to around 34%), its operating margin went down to about 9% in 2017.

Stock price

This stock currently has a stock price/cash flow ratio of 50. We think that its stock is being relatively overvalued considering that we do not know when its recent fast increase in revenue of international market can bring it increase in cash flow and how much.

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