Sector financial performance:

This company, which primarily owns and operates casino entertainment and hospitality service, 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 and related service of this company has been weak in the mot of time in past three years. The business in west region seems to start booming into 2018 while it is still weak in other regions.

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

Organic gaming revenue (excluding acquisition) increased 2.3% due to increase in west region visitors.

The fiscal 2017 compared with 2016

Organic gaming revenue (excluding acquisition) decreased 2.5% due to decrease in all regions.

Fiscal 2016 compared with fiscal 2015

Organic gaming revenue (excluding acquisition) decreased due to decrease in all regions except for west region.

Its gross margin (including depreciation) went up to about 39% in 2018 as a result of acquisition and leveraging of improved revenue. And with much higher SG&A as percentage of sales (around 24%) as a result of acquisition, its operating margin has been up to around 15%.

Stock price

This stock currently has a stock price/cash flow ratio of 36, which reflects the situation that the consolidation of financial statements was not completely done yet ( one more month ended May 2018) and it paid premium for acquired company for the saving of synergies ( not realized yet). We think that its stock is being relatively overvalued currently.