I start paying closer attention to companies that have positive trailing twelve month earnings. This past earnings season, Nevada Gold & Casinos (NYSEMKT:UWN) reported its fiscal year 2013 results, which included a full year profit. As a result, I have added the company to my "watch" list. While in a good financial position, UWN still has some key points where it can improve. For now, it will remain under close watch.
Nevada Gold & Casinos operates as a gaming property/project entity primarily in Washington, South Dakota, and Colorado. The company runs a number of casinos primarily in Washington state. Over the past 52 weeks, UWN has traded between $0.71-$1.30/share.
The company closed its fourth quarter and fiscal 2013 on April 30, 2013. During the fourth quarter, revenues fell $48,712--or 0.3%. Operating expenses, however, were reduced by a significant 31.1%; primarily because of the complete eradication of the valuation allowance of assets expense. This ultimately led to a $452,434 net income compared to a $5,328,072 net loss for the same quarter last year.
All in all, I give UWN a rating of 9 of 13. Points still marking against the company:
- Revenues were down in the most recent quarter;
- $12.9 million in long-term debt, which represents 18.4% of the company's annual revenues;
- Trading just 8.5% off its 52-week high; and
- For such a small company, the share structure isn't quite intact. Insiders own just 7.8% of the 16 million shares.
Some of the company's positive points include:
- Book value of $1.73, representing a 45.4% premium over current trading price;
- A positive earnings trend, including the increased year-over-year earnings reported for the company's most recent quarter; and
- A current asset-to-liabilities ratio of 1.8, resulting in $4.5 million in working capital.
UWN has just scraped by with a net profit. There is increased pressure on the gaming industry worldwide, especially smaller gaming entities. However, some small companies are succeeding. Whether Nevada Gold & Casinos can continue to improve its results by keeping operating expenses low is yet to be seen. However, the company's high rating (everything above an 8 is considered good) hints at the company's relatively strong financial position.
Additional disclosure: Companies discussed in this article may involve previous Bowser Companies of the Month. The discussions are the opinions of Thomas Rice and are not related to The Bowser Report's past, present or future recommendations.