Monarch Casino & Resort, Inc. (MCRI)

[investora2z]

The earnings in the last quarter gave a boost to the stock. It has appreciated by nearly 70% after that. On a 52 week basis the stock is up by ~85%. In the last quarter it had reported an EPS of $0.26 which was a 160% growth on a yoy basis. Even the revenues increased by 34% on a yoy basis to $47.64 million. This was much above the analyst estimates of $0.16 for EPS and $46.80 million for revenues. Currently Wells Fargo & Co. has put a market perform rating on the stock. Zacks downgraded it to neutral but has a price target of $18.00. The stock has a consensus buy rating with a price target of $16.88. Even over the years, the fundamentals have improved. Compared with 2011, the revenues increased by 21% to $161 million and the net income also increased by 57% to $8.91 million. The recent rise can be partly attributed to the impact of the acquisition of Riviera Black Hawk Casino in Colorado. The acquisition has tremendous potential for expansion, and can also be converted into a full fledged resort. The valuations are attractive with forward P/E of around 16 and low price to book of 1.84. Debt is a little high at around $71 million and the cash is around $20 million as on March 31. Debt has increased recently mainly due to the acquisition of the Colorado property. Relative to the larger casino companies, MCRI is still better on debt-equity ratio, and has better growth prospects. It has been making profits unlike many bigger companies which are incurring losses. Specifically, Caesars (CZR), Penn National Gaming (PENN), MGM Resorts (MGM) and Scientific Games (SGMS) have the risk of the $4.5 billion patent infringement lawsuit filed by MGT Capital Investments (MGT). A recent article on Seekingalpha is extremely positive on MCRI.