Global Cash Access (GCA) is undervalued given its high free cash flow and strong market position.
GCA provides cash access products and services to the gaming industry through ~1,100 casinos in over 35 countries. GCA distributed ~$21 billion in cash to gaming patrons in 2012 through more than 90 million transactions.
Virtually all U.S. gaming transactions are completed in cash and 60%-plus of all wagered funds come from on-floor cash access services. A vast majority of casinos outsource cash access service to third-party providers due to lack of scale and the fact that these services are not considered a core competency.
GCA generates revenue from three primary segments:
Cash advance. This consists of transaction fees...
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