“Slow and steady winds the race..” - Aesop: from the tale of the turtle and the hare
Pre virus, investors who bought into my enthusiastic guidance on Monarch Casino & Resort (NASDAQ:MCRI) were rewarded. Here’s a history of my calls on Seeking Alpha:
Date of article Price that day: Our PT:
5/2016 $19.65 $24/$26
11/22/16 $24 $30
4/8/17 29 we still guided up
8/24/17 45 we still guided up
2019 52 wk
pre virus high $57 we saw a $65 stock
The run: From $19.65 to $57.57, the stock nearly tripled over four years, mostly financing expansion with FCF.
A virus-infected trade will be devastating but far from fatal for MCRI. As a matter of fact, this look at a post-virus Monarch suggests to us that its ramp back north will be speedy, energized by the opening of its Black Hawk, Colorado, nine-story, 516-room suite/hotel tower in a market severely underserved to date with room inventory. Its property, The Monarch, sits 25 miles from Denver, first off the highway. The expansion will include an already upscaled 1,350 space garage, nearly double of what was originally planned. The garage was originally scaled smaller but demand dictated a scale up.
First quarter results from analysts expect earnings to nose dive to $0.28, off 26.3% year-over-year. Revenue is expected to crater to $53M, down 9%, and probably headed even lower by Q2. The virus devastation could get worse, but likely will begin to ease by summer.
All this has contributed to a price at writing of ~$25, or a decline of over 50%, pretty much within the general collapse of the entire gaming sector since COVID-19 took the US economy hostage. MCRI has recovered from its 52-week low this year of $12.83. Its market cap today has fallen to $468M, showing a beta (five-year monthly) of 1.41, which we believe continues to show a
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