Sector financial performance:

This company, which primarily owns and operates casinos and entertainment facilities, 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 in Las Vegas has been strong and growth has been accelerating in the past three years.

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

Net revenue decreased 1.1% primarily attributable to construction disruption offset by increase of 5.7% in casino revenue due to increased volume.

The fiscal 2017 compared with 2016

Same store revenue (excluding acquisition) increased 3.5% primarily attributable to increase of 3.9% in same store casino revenue due to increased volume.

Fiscal 2016 compared with fiscal 2015

Same store revenue (excluding acquisition) increased 4.6% primarily attributable to increase of 32.5% in same store casino revenue.

Its gross margin (including depreciation) was improved to about 45% in 2018. And with improved SG&A as percentage of sales (around 22%), its operating margin has been improved to around 23%.

Stock price

This stock currently has a stock price/cash flow ratio of 45. We think that its stock is being relatively overvalued compared with its peer- Penn National Gaming, Inc.