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On Friday, Stifel analysts revised the price target for Century Casinos (NASDAQ:CNTY) stock to $4.00, a decrease from the previous target of $5.00. Despite the price target reduction, Stifel has opted to maintain a Buy rating on the company’s shares. The adjustment comes after Century Casinos reported earnings that slightly missed the consensus estimates, which had already been adjusted downward by approximately 20% before the earnings release. According to InvestingPro data, the stock is currently trading at $1.86, having fallen over 41% year-to-date, with analysts’ targets ranging from $4.00 to $6.00.Want deeper insights? InvestingPro subscribers have access to 13 additional ProTips and comprehensive financial metrics for Century Casinos.
The shortfall in earnings relative to the original forecasts was attributed to persistent challenges at the Nugget Casino (EPA:CASP) and Rocky Gap properties, exacerbated by seasonal trends. Additionally, Century Casinos’ operations in Poland underperformed expectations following the reopening of its Wroclaw venue in the third quarter of 2024, due to one-off costs and timing issues related to the venue’s ramp-up. The ongoing sales process for the Polish assets also influenced the results. The company’s financial health shows signs of strain, with InvestingPro data indicating significant debt burden and negative free cash flow yield, though its current ratio of 1.79 suggests adequate short-term liquidity.
The company’s stock experienced a notable sell-off on the same day, which Stifel analysts found surprising given that the anticipated headwinds had been clearly communicated in analyst previews prior to the earnings announcement. Stifel anticipates a partial recovery in the stock price on the following day. However, the firm suggests that reaching the new $4 price target will depend on the company’s ability to deliver on the return on investment for its Missouri project, stabilize operations at Reno/Golden Gulch and Nugget Casino, and successfully complete the sale of its non-core assets in Poland. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels, though investors should note the company’s weak overall financial health score and negative return on assets of -4.95%.
Stifel also revised its adjusted EBITDAR forecasts for fiscal years 2025 and 2026, reducing them by 12% and 8%, respectively, due to the weaker performance in Reno and Rocky Gap. Despite the lowered expectations and price target, Stifel’s reiteration of a Buy rating indicates the firm’s continued confidence in Century Casinos’ long-term prospects. The company’s EBITDA stands at $101.68 million for the last twelve months, though analysts expect negative earnings per share of -$2.55 for the current fiscal year.
In other recent news, Century Casinos reported a significant miss in its fourth-quarter 2024 earnings, with an earnings per share (EPS) of -2.11, falling short of the forecasted -0.46. The company’s revenue also missed expectations, coming in at $137.8 million compared to the anticipated $142.62 million. This disappointing performance was partly attributed to weather-related disruptions and broader industry challenges, including inflationary pressures. Despite these setbacks, Century Casinos completed a major development with the opening of a new facility in Caruthersville, Missouri, in November 2024. Analysts from Citizens JMP have adjusted their price target for the company, lowering it from $5.00 to $4.00, while maintaining a Market Outperform rating. The firm remains cautiously optimistic about the company’s future, noting the potential for improved results as weather conditions become more favorable. Looking ahead, Century Casinos plans to focus on operational efficiency and explore asset divestments, with expectations for better EBITDA and cash flow improvements in 2025.
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