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Golden Entertainment Gives Cash Flow, Capital Return Possible, According to Analyst

Golden Entertainment Provides Money Flow, Capital Return Potential, According to Analyst

Posted on: February 16, 2022, 11:38h.&nbsp

Final updated on: February 16, 2022, 11:38h.

Quietly a single of this year’s greatest-performing gaming equities, Golden Entertainment (NASDAQ:GDEN) is soaring once more these days after a sell-side analyst issued a bullish a report on the Strat owner.

Golden Entertainment
The Strat Las Vegas. An analyst sees big upside for operator Golden Entertainment (Image: Las Vegas Evaluation-Journal)

In late trading, shares of Golden are greater by four percent on above-average volume, extending a run that is noticed the casino stock surge almost 16 % more than the previous week following Roth Capital analyst Edward Engel restarted coverage of the name with a “buy” rating and a $70 price target. That implies upside of 23.8 percent from the Feb. 15 close.

With Golden sporting a free of charge money flow (FCF) yield of 12 percent, Engel says the stock is an “underappreciated” FCF story. Las Vegas-based Golden operates 10 casinos, nine of which are in Southern Nevada, like the Strat.

Analysts and investors also like the strength in Golden’s a variety of businesses, such as its gaming route unit (a&nbspbusiness exactly where they install slot machines in locations like bars, restaurants, truck stops, and so forth.)and PT’s Entertainment, which controls 60 bars, pubs, and casual dining restaurants. These are recovering strongly following the 2020 shutdowns forced by the COVID-19 pandemic.

Golden Entertainment Could Be Golden Shareholder Rewards Story

Following a spate of suspensions amid the onset of the pandemic, dividends are nevertheless hard to come by in the gaming business, but Engel believes Golden will soon return capital to shareholders.

Right after last decade’s M&ampA, deleveraging and renovation cycle, we anticipate GDEN shift concentrate to buy-backs/dividends,” said the analyst. “This offers a rare capital return story for gaming investors, and is exclusive vs peers targeting expensive iGaming expansion.”

The firm currently does not pay a dividend, but with limited near-term expansion plans and debt refinanced at more favorable terms, Golden has an opportunity to reward investors with buybacks and, potentially, by introducing a dividend.

“After refinancing debt, we expect GDEN to accelerate capital returns to shareholders in 2H22, with a concentrate on share get-backs and some introduction of a dividend,” mentioned the analyst.

Macro Trends Benefiting Golden

Golden was one particular of the star gaming stocks of 2021, but some market place observers attributed that bullishness to transitory elements, such as government stimulus and pent-up demand.

Engel says there’s much more to the story and that amid ongoing vibrancy in the Las Vegas locals marketplace — a crucial constituency for Golden — rewards that accrued to the operator final year could prove much more permanent than some experts expect.

“Those visiting LV suburbs will uncover expanding similarities among SoCal and Phoenix/Tempe, where taxes, weather and affordability are driving a fantastic migration,” concludes the analyst. “While population information remains restricted for 2021, we’ve observed evidence that migration to the Las Vegas region has accelerated since early 2021, driving an acceleration in housing costs, employment and population.”

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