Accel Entertainment: Thinking Big In Distributed Gaming

Chetan Woodun profile picture
Chetan Woodun
5.93K Followers

Summary

  • Accel's growth, both organic and through acquisitions, is impressive.
  • Its partnership approach with local business owners where its gaming machines are installed also merits emphasis in light of surging wage inflation amid the service sector.
  • However, debt is growing rapidly while capital expenses have surged, two factors that are not digested well by the market when monetary policy gets tightened by the Fed.
  • This is counterbalanced by the company's superior cash-generating ability while growing revenues at double digits.
  • For those who are not convinced that Accel is a buy, a comparison with giant Las Vegas Sands for operating margins helps to show the viability of its business model.

Retro underground control room with men in front of the console

gremlin/E+ via Getty Images

The last time I covered Accel Entertainment (NYSE:NYSE:ACEL), a distributed gaming operator was in June 2021, when it was still recovering from the Covid lockdown measures which had impacted businesses from the services sector in

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Data by YCharts

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Company presentation (seekingalpha.com)

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Quarterly Income Statement (seekingalpha.com)

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Comparing of Key Metrics (seekingalpha.com)

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Accel's Valuation Grade (www.seekingalpha.com)

This article was written by

Chetan Woodun profile picture
5.93K Followers
My aim is to provide differentiated insights, whether it is for investing, trading, or informational reasons. For this purpose, I am not a classical equity researcher or fund manager, but, I come from the IT world as the founder of Keylogin Information and Technologies Co. Ltd. Thus, my research is often backed by analytics and I make frequent use of charts to support my position.I also invest, and thus, in this tumultuous market, I often look for strategies to preserve capital. As per my career history below, I have wide experience, initially as an implementer in virtualization and cloud, and I was subsequently a team leader and project lead, mostly working in telcos.I have also been a mediocre entrepreneur in real estate, and a farmer, and like to dedicate at least 5 hours per week to working on a non-profit basis. For this purpose, I regularly contribute peer reviews and opinions for enterprise tech and help needy families by providing sponsored work.As for Research, I started with Tech stocks before going Multi-Tech with Fintechs, Biotechs, and Cryptotechs.I have been investing for the last 25 years, initially in mutual funds where the "learned economists" would always advise you to "think long term". Got a lot of experience in the 2008/2009 downturn when I lost a lot. Since then I do my own research and have fallen in love with Seeking Alpha because of the unique perspectives it provides to someone investing hard-earned money as well as access to some of the best financial advisors.We live only once but can have many "investment lives" especially when investing in individual stocks.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

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