A pair of record highs propelled Monarch Casino Resorts to higher second-quarter net income and revenue from a year ago. Slot win hit a pinnacle at the Atlantis hotel-casino in Reno and hotel revenue peaked at the Monarch Casino Black Hawk in Black Hawk, Colorado.
Nevertheless, both profit and revenue missed analysts’ forecasts.
In a statement Tuesday, the Reno-based company said net income was $9.2 million, or 50 cents per diluted share, for the three months ended June 30, up from net income of $7.2 million, or 40 cents per diluted share, a year earlier.
Analysts polled by Yahoo Finance forecast the company would earn 51 cents per share.
Revenue rose 2.9 percent to $59 million from $58.2 million. The latest results missed the $60.7 million estimate of Yahoo Finance-polled analysts.
Adjusted earnings before interest, taxes, depreciation and amortization, a measure of cash flow, rose 0.6 percent to $15.9 million from $15.8 million.
Monarch Co-Chairman and CEO John Farahi said increased construction-related expenses helped keep cash flow growth sluggish.
“Flow-through to adjusted EBITDA was impacted by increased labor expense over the prior year and incremental construction-related expenses, compounded by historically low table game hold at Atlantis,” Farahi said in a statement accompanying the earnings.
Farahi said that nevertheless performance at both company properties merits optimism. Atlantis, he said, is benefiting from an economic resurgence in Reno and its nearness to the city’s convention center. The Reno Gazette-Journal this month reported the Reno-Sparks area topped 5 million visitors in 2017, the first time the mark has been breached.
Meanwhile, he said, guest play and market share gains augur well for the future of the property, which is expanding by adding a 23-story, 500-room hotel tower. The $400 million project, which started in 2016 after the completion of a parking garage, is on time — set to finish next year — and on budget, he said.
“We remain focused on delivering exceptional guest service as we continue to evaluate our operations and explore the use of technology and analytics to drive further efficiencies, improve margins and increase profitability,” he said. “Overall, we believe 2018 remains on track to be a year of growth.”
In May, Reno-based Monarch raised its profile by participating in the ninth annual Wells Fargo Gaming, Hospitality and Leisure Conference at the Mandarin Oriental in Las Vegas. Farahi held one-on-one meetings with institutional investors and participated on two industry panels.
TheStreet.com rates Monarch stock A or “buy,” matching the consensus of eight analysts polled by MarketBeat Ratings. However, Seeking Alpha analyst Graeme Brawn in April expressed caution.
“Management has a track record for developmental success as evidenced by the Black Hawk acquisition in 2012 and has consistently captured market-share in Reno,” Brawn wrote. “However, we believe that management has overoptimistically forecast demand in Black Hawk and thus are skeptical of future growth prospects.”
Monarch Casino shares rose 28 cents, or 0.6 percent, Tuesday to close at $47.31on the Nasdaq. The share price has risen 6.1 since 2018 trading opened Jan. 2.
