Earnings To Watch: Monarch (MCRI) Reports Q4 Results Tomorrow

Looking back on casino operator stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Bally's and its peers.

Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.

The 11 casino operator stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 1.9%.

In light of this news, share prices of the companies have held steady as they are up 1.6% on average since the latest earnings results.

Bally's

Headquartered in Providence, Rhode Island, Bally's Corporation is a diversified global casino-entertainment company that owns and manages casinos, resorts, and online gaming platforms.

Bally's reported revenues of $663.7 million, up 5.4% year on year. This print fell short of analysts’ expectations by 0.7%. Overall, it was a softer quarter for the company with a significant miss of analysts’ adjusted operating income and EPS estimates.

The stock is down 7.1% since reporting and currently trades at $17.26.

Read our full report on Bally's here, it’s free.

Best Q3: Super Group

With betting operations spanning 20 jurisdictions and attracting nearly 5 million monthly customers, Super Group operates global online sports betting and gaming platforms through its two primary offerings: the Betway sports betting brand and Spin multi-brand casino portfolio.

Super Group reported revenues of $557 million, up 25.7% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.

Super Group scored the fastest revenue growth among its peers. The company added 11,666.667 customers to reach a total of 5.51 million. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 16.6% since reporting. It currently trades at $10.11.

Weakest Q3: MGM Resorts

Operating several properties on the Las Vegas Strip, MGM Resorts is a global hospitality and entertainment company known for its resorts and casinos.

MGM Resorts reported revenues of $4.25 billion, up 1.6% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Interestingly, the stock is up 14.5% since the results and currently trades at $35.47.

Read our full analysis of MGM Resorts’s results here.

Boyd Gaming

Run by the Boyd family, Boyd Gaming is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Boyd Gaming reported revenues of $1.00 billion, up 4.5% year on year. This number beat analysts’ expectations by 15.7%. Taking a step back, it was a mixed quarter as it also recorded an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ adjusted operating income estimates.

Boyd Gaming scored the biggest analyst estimates beat among its peers. The stock is up 5.5% since reporting and currently trades at $89.63.

Read our full, actionable report on Boyd Gaming here, it’s free.

Monarch

Established in 1993, Monarch operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Monarch reported revenues of $142.8 million, up 3.6% year on year. This print missed analysts’ expectations by 1.7%. Zooming out, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a miss of analysts’ Dining revenue estimates.

Monarch had the weakest performance against analyst estimates among its peers. The stock is down 5.2% since reporting and currently trades at $92.18.

Read our full, actionable report on Monarch here, it’s free.

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at casino operator stocks, starting with Super Group .

Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.

The 11 casino operator stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 1.9%.

In light of this news, share prices of the companies have held steady as they are up 2.8% on average since the latest earnings results.

Best Q3: Super Group

With betting operations spanning 20 jurisdictions and attracting nearly 5 million monthly customers, Super Group operates global online sports betting and gaming platforms through its two primary offerings: the Betway sports betting brand and Spin multi-brand casino portfolio.

Super Group reported revenues of $557 million, up 25.7% year on year. This print exceeded analysts’ expectations by 9.2%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ EBITDA estimates.

Neal Menashe, Chief Executive Officer of Super Group, commented: “We are incredibly pleased with our Q3 performance, which highlights the continued strength of our global platform and consistent execution across our core markets. Despite customer-friendly outcomes in September, we delivered record-level customer engagement, strong revenue growth, and margin expansion. Hitting six million monthly active customers was another significant milestone, a reflection of our product innovation and local execution. With continued momentum into Q4, and the highly anticipated launch of Super Coin, we are focused on driving long-term value for our shareholders and enhancing our global position.”

Super Group achieved the fastest revenue growth of the whole group. The company added 11,666 customers to reach a total of 5.51 million. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 3.4% since reporting and currently trades at $11.71.

Flutter Entertainment

With its digital fingerprints on nearly every aspect of global gambling, from the Super Bowl bettor to the online poker aficionado, Flutter Entertainment (NASDAQ:FLUT) operates a portfolio of leading online sports betting and gaming brands including FanDuel, PokerStars, Paddy Power, and Sky Betting & Gaming.

Flutter Entertainment reported revenues of $3.79 billion, up 16.8% year on year, falling short of analysts’ expectations by 1.4%. However, the business still had a satisfactory quarter with an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ EPS estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.4% since reporting. It currently trades at $219.17.

Weakest Q3: MGM Resorts

Operating several properties on the Las Vegas Strip, MGM Resorts is a global hospitality and entertainment company known for its resorts and casinos.

MGM Resorts reported revenues of $4.25 billion, up 1.6% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Interestingly, the stock is up 17.8% since the results and currently trades at $36.50.

Read our full analysis of MGM Resorts’s results here.

Monarch

Established in 1993, Monarch operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Monarch reported revenues of $142.8 million, up 3.6% year on year. This print missed analysts’ expectations by 1.7%. Zooming out, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a miss of analysts’ Dining revenue estimates.

Monarch had the weakest performance against analyst estimates among its peers. The stock is down 1.3% since reporting and currently trades at $95.96.

Read our full, actionable report on Monarch here, it’s free for active Edge members.

PENN Entertainment

Established in 1982, PENN Entertainment is a diversified American operator of casinos, sports betting, and entertainment venues.

PENN Entertainment reported revenues of $1.72 billion, up 4.8% year on year. This result came in 0.5% below analysts' expectations. It was a disappointing quarter as it also logged a significant miss of analysts’ EBITDA and EPS estimates.

The stock is down 10.7% since reporting and currently trades at $14.60.

Read our full, actionable report on PENN Entertainment here, it’s free for active Edge members.

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how casino operator stocks fared in Q3, starting with Boyd Gaming .

Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.

The 9 casino operator stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 1.5%.

In light of this news, share prices of the companies have held steady as they are up 3.8% on average since the latest earnings results.

Best Q3: Boyd Gaming

Run by the Boyd family, Boyd Gaming is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Boyd Gaming reported revenues of $1.00 billion, up 4.5% year on year. This print exceeded analysts’ expectations by 15.7%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ revenue estimates but a significant miss of analysts’ adjusted operating income estimates.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: "During the third quarter, our Company continued to achieve revenue and Adjusted EBITDAR growth after adjusting for our recent FanDuel transaction. These results were driven by year-over-year growth in play from our core customers, improving trends in play from our retail customers, our efficient operations, and our ongoing capital investment program. As a result, we saw healthy growth in gaming revenues across all three property operating segments during the quarter. At the same time, we continued our balanced approach to capital allocation, returning $175 million to shareholders during the quarter while maintaining the strongest balance sheet in our Company's history. In all, we are encouraged by the strength of our business and remain well-positioned to continue creating long-term value for our shareholders."

Boyd Gaming pulled off the biggest analyst estimates beat of the whole group. The stock is up 1.1% since reporting and currently trades at $85.86.

Red Rock Resorts

Founded in 1976, Red Rock Resorts operates a range of casino resorts and entertainment properties, primarily in the Las Vegas metropolitan area.

Red Rock Resorts reported revenues of $475.6 million, up 1.6% year on year, falling short of analysts’ expectations by 0.8%. The business performed better than its peers, but it was unfortunately a mixed quarter with a beat of analysts’ EPS estimates but a miss of analysts’ Hotel revenue estimates.

The market seems happy with the results as the stock is up 6.4% since reporting. It currently trades at $63.03.

Weakest Q3: MGM Resorts

Operating several properties on the Las Vegas Strip, MGM Resorts is a global hospitality and entertainment company known for its resorts and casinos.

MGM Resorts reported revenues of $4.25 billion, up 1.6% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Interestingly, the stock is up 18.1% since the results and currently trades at $36.57.

Read our full analysis of MGM Resorts’s results here.

Monarch

Established in 1993, Monarch operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Monarch reported revenues of $142.8 million, up 3.6% year on year. This number came in 1.7% below analysts' expectations. Taking a step back, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a miss of analysts’ Dining revenue estimates.

Monarch had the weakest performance against analyst estimates among its peers. The stock is flat since reporting and currently trades at $96.48.

Read our full, actionable report on Monarch here, it’s free for active Edge members.

Caesars Entertainment

Formerly Eldorado Resorts, Caesars Entertainment is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.

Caesars Entertainment reported revenues of $2.87 billion, flat year on year. This print lagged analysts' expectations by 0.9%. Overall, it was a softer quarter as it also produced a significant miss of analysts’ EPS estimates and a miss of analysts’ EBITDA estimates.

The stock is up 5.5% since reporting and currently trades at $23.30.

Read our full, actionable report on Caesars Entertainment here, it’s free for active Edge members.

Monarch has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 18.1% to $99.46 per share while the index has gained 13.6%.

Why Do We Think Monarch Will Underperform?

We're swiping left on Monarch for now. Here are three reasons you should be careful with MCRI and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Monarch grew its sales at a 23.5% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

2. Projected Free Cash Flow Gains to Pump Profits

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Over the next year, analysts predict Monarch’s cash conversion will slightly improve. Their consensus estimates imply its free cash flow margin of 26.3% for the last 12 months will increase to 27.2%, it options for capital deployment (investments, share buybacks, etc.).

3. New Investments Bear Fruit as ROIC Jumps

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Monarch’s ROIC averaged 3 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

Final Judgment

Monarch doesn’t pass our quality test. That said, the stock currently trades at 17.4× forward P/E (or $99.46 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are better stocks to buy right now. We’d suggest looking at one of our top software and edge computing picks.

As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the casino operator industry, including Golden Entertainment and its peers.

Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.

The 9 casino operator stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 1.5%.

While some casino operator stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.6% since the latest earnings results.

Golden Entertainment

Founded in 2001, Golden Entertainment is a gaming company operating casinos, taverns, and distributed gaming platforms.

Golden Entertainment reported revenues of $154.8 million, down 4% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a softer quarter for the company with a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Golden Entertainment delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 35.5% since reporting and currently trades at $28.77.

Read our full report on Golden Entertainment here, it’s free for active Edge members.

Best Q3: Boyd Gaming

Run by the Boyd family, Boyd Gaming is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Boyd Gaming reported revenues of $1.00 billion, up 4.5% year on year, outperforming analysts’ expectations by 15.7%. The business performed better than its peers, but it was unfortunately a mixed quarter with an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ adjusted operating income estimates.

Boyd Gaming achieved the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 8.2% since reporting. It currently trades at $78.02.

Is now the time to buy Boyd Gaming? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: MGM Resorts

Operating several properties on the Las Vegas Strip, MGM Resorts is a global hospitality and entertainment company known for its resorts and casinos.

MGM Resorts reported revenues of $4.25 billion, up 1.6% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

As expected, the stock is down 1.5% since the results and currently trades at $30.52.

Read our full analysis of MGM Resorts’s results here.

Monarch

Established in 1993, Monarch operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Monarch reported revenues of $142.8 million, up 3.6% year on year. This print lagged analysts' expectations by 1.7%. Aside from that, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a miss of analysts’ Dining revenue estimates.

Monarch had the weakest performance against analyst estimates among its peers. The stock is down 2.2% since reporting and currently trades at $95.12.

Read our full, actionable report on Monarch here, it’s free for active Edge members.

Red Rock Resorts

Founded in 1976, Red Rock Resorts operates a range of casino resorts and entertainment properties, primarily in the Las Vegas metropolitan area.

Red Rock Resorts reported revenues of $475.6 million, up 1.6% year on year. This number missed analysts’ expectations by 0.8%. Zooming out, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a miss of analysts’ Hotel revenue estimates.

The stock is down 8% since reporting and currently trades at $54.53.

Read our full, actionable report on Red Rock Resorts here, it’s free for active Edge members.

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how MGM Resorts and the rest of the casino operator stocks fared in Q3.

Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.

The 9 casino operator stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 1.5%.

While some casino operator stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.6% since the latest earnings results.

Weakest Q3: MGM Resorts

Operating several properties on the Las Vegas Strip, MGM Resorts is a global hospitality and entertainment company known for its resorts and casinos.

MGM Resorts reported revenues of $4.25 billion, up 1.6% year on year. This print was in line with analysts’ expectations, but overall, it was a disappointing quarter for the company with a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

"MGM Resorts delivered another quarter of consolidated net revenue growth as we benefit from our operational scale and diversity, highlighted by record third quarter results from MGM China," said Bill Hornbuckle, Chief Executive Officer & President of MGM Resorts International.

Unsurprisingly, the stock is down 1.5% since reporting and currently trades at $30.52.

Read our full report on MGM Resorts here, it’s free for active Edge members.

Best Q3: Boyd Gaming

Run by the Boyd family, Boyd Gaming is a diversified operator of gaming entertainment properties across the United States, offering casino games, hotel accommodations, and dining.

Boyd Gaming reported revenues of $1.00 billion, up 4.5% year on year, outperforming analysts’ expectations by 15.7%. The business performed better than its peers, but it was unfortunately a mixed quarter with an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ adjusted operating income estimates.

Boyd Gaming scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 8.2% since reporting. It currently trades at $78.02.

Is now the time to buy Boyd Gaming? Access our full analysis of the earnings results here, it’s free for active Edge members.

PENN Entertainment

Established in 1982, PENN Entertainment is a diversified American operator of casinos, sports betting, and entertainment venues.

PENN Entertainment reported revenues of $1.72 billion, up 4.8% year on year, falling short of analysts’ expectations by 0.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.

As expected, the stock is down 15.8% since the results and currently trades at $13.77.

Read our full analysis of PENN Entertainment’s results here.

Monarch

Established in 1993, Monarch operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Monarch reported revenues of $142.8 million, up 3.6% year on year. This result came in 1.7% below analysts' expectations. Zooming out, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a miss of analysts’ Dining revenue estimates.

Monarch had the weakest performance against analyst estimates among its peers. The stock is down 2.2% since reporting and currently trades at $95.12.

Read our full, actionable report on Monarch here, it’s free for active Edge members.

Golden Entertainment

Founded in 2001, Golden Entertainment is a gaming company operating casinos, taverns, and distributed gaming platforms.

Golden Entertainment reported revenues of $154.8 million, down 4% year on year. This number lagged analysts' expectations by 1.3%. Overall, it was a softer quarter as it also logged a miss of analysts’ Hotel revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Golden Entertainment had the slowest revenue growth among its peers. The stock is up 35.5% since reporting and currently trades at $28.77.

Read our full, actionable report on Golden Entertainment here, it’s free for active Edge members.