Golden Leisure Cooled by Sizzling Summer season, Analyst Nonetheless Bullish
This summer season was the most well liked on document in southern Nevada, prompting some would-be bettors to remain out of locals’ casinos and gaming bars in Las Vegas and Laughlin. Because of this, B. Riley analyst David Bain lowered estimates on Golden Leisure (NASDAQ: GDEN).
Golden Leisure’s Strat Las Vegas. An analyst mentioned the venue may contribute to a rebound for the operator’s inventory. (Picture: Vegas Means Enterprise)
Nonetheless, Bain stays constructive on the inventory, reiterating a “purchase” score with a brand new value goal of $40, down from $44. That new forecast implies upside of about 33% from the place the shares reside at this writing. There may be some benefit to the notion {that a} scorching summer season weighed on Golden because the inventory is decrease by 3.23% over the previous 90 days, contributing to a year-to-date lack of 25.48%.
This summer season was the most well liked in Las Vegas climate historical past, negatively impacting attendance at native resorts, casinos, and taverns, in our view,” wrote Bain. “Additional, whereas LV conference attendance stays steady, July conference attendance was -7%, tied to indicate rotation cycles and the absence of the AWFS Truthful held final July. We imagine Laughlin site visitors, whereas nonetheless up, slowed barely in 3Q, and general lower-tier buyer weak spot throughout the business continues.”
Golden owns and operates the Aquarius and Edgewater in Laughlin the place it tussles with Caesars Leisure (NASDAQ: CZR) for the highest spot in that market.
Strat May Increase Golden Leisure
Formally, the Strat isn’t on the Las Vegas Strip, however it’s shut, and that on line casino resort is the premier property within the Golden Portfolio. Bain, who lowered 2024 and 2025 earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) estimates on Golden, famous the Strat’s weekend occupancy charges have been strong, however midweek remains to be beneath 2019 ranges.
We imagine occupancy again to CY19 ranges equates to $15M+ EBITDA on the STRAT, a overwhelming majority of which isn’t factored into consensus or our estimates. We count on ahead city-wide conference attendance tendencies, notably starting in 4Q24E, to function an intermediate-term optimistic for STRAT midweek occupancy,” famous the analyst.
Bain added that Strat may see a $1 million to $2 million quarterly EBITDA enhance from Atomic Golf, which opened in March. Bain and different analysts have additionally highlighted the Strat as a beneficiary of the Tropicana demolition and the non permanent closure of the Mirage.
Golden to Give attention to Share Buybacks
Golden is more likely to proceed emphasizing the return of capital to buyers, primarily by means of repurchasing its personal shares.
We imagine GDEN continues to repurchase shares, and it’ll doubtless exhaust the remaining $61M on its share repurchase earlier than the tip of the yr, in our view,” mentioned the analyst. “Given web leverage 1 flip beneath its 3.0x goal, we imagine GDEN may look to make the most of each free money move and a portion of its $240M undrawn revolver to proceed vital share repurchases by means of subsequent yr.”
Bain added that with rates of interest declining, Golden may take into account promoting the actual property on which its casinos sit, a transfer that might add as much as $12 per share worth. The corporate hasn’t mentioned it’s contemplating such transactions.
