Monarch Resort and Casino continued its hot streak in the third quarter, reporting strong revenue and EBITDA growth Tuesday on the heels of sustained growth in the Reno and Colorado markets.
The company, which has emerged as a regional gaming darling in recent quarters, grew revenues by 10.4 percent year-over-year to $63 million, and adjusted EBITDA by 7.4 percent to $17.5 million. Net income grew by 15.3 percent to $9 million, while diluted earnings per share were up 8.9 percent to $0.49.
The strong report extends what has become an impressive winning streak in recent years.
“Our net revenue, net income and adjusted EBITDA have improved year over year every quarter for the past three years,” said John Farahi, Monarch’s co-chairman and chief executive officer.
The small cap company is quickly becoming a favorite among gaming analysts on Wall Street because of its strong financial position and geographic location.
“At this point, it’s hard to poke any holes in what is a very compelling long-term growth story,” wrote John DeCree, an an analyst with Union Gaming Research, in a note to clients.
“There is no denying MCRI is uniquely positioned amongst its regional gaming operator peer group, as both of the company’s operating assets are located in markets that are fundamentally thriving,” wrote Steven Wieczynski of Stifel Nicolaus.
Chad Beynon of Macquarie Research took note of the fact that same store revenues grew by 11 percent during the quarter.
“This is particularly impressive given construction disruptions at Black Hawk, and sets the stage for industry-leading organic growth for the next several years. Meanwhile, leverage remains minimal; thus, we see opportunity for mergers and acquisitions – but note, this family-run company is one of the most disciplined in the industry,” he said.
Farahi emphasized that Monarch’s Atlantis Casino Resort in Reno and Monarch Casino Black Hawk in Colorado are well-positioned for continued growth moving ahead, both because of strength in the surrounding feeder markets and due to improvements at the respective properties.
“The strength of the Reno market and ongoing facility enhancements at Atlantis Casino Resort are driving healthy visitation and increased player spend in this very competitive market,” Farahi said.
“Reno’s economy is expanding, and we believe that we are well-positioned to attain near- and long-term growth at Atlantis due to our favorable location, superior product and exceptional guest experience,” he added.
Analysts affirmed that continued strength in the Reno and Black Hawk Markets were key reasons for their bullish stance.
“Wage growth, median home prices and new jobs in Reno continue to position MCRI (best-in market casino) to take advantage of the ‘Reno-ssance,’ while high service levels and growing share in Black Hawk should keep the company growing ahead of the approximately $300m property expansion.” said Beynon.
“The organic growth outlook in Black Hawk is very similar to Reno with strong economic fundamentals. While the MCRI property is beginning to bump up against capacity constraints, help is just around the corner,” added DeCree.
Monarch shares opened trading on Wednesday at $43.89, up slightly from Tuesday’s closing price.
