Golden Entertainment Prepares for Q3 2024 Financial Results: What Analysts Are Forecasting
On a pivotal Wednesday, Golden Entertainment, a prominent American gaming company known for its diverse gaming properties, slot routes, and taverns, announced that it would release its third-quarter financial results for 2024 after the market closes on November 7, 2024. In anticipation of these results, analysts have begun sharing their forecasts, highlighting potential challenges and opportunities for the company.
Deutsche Bank’s Outlook: Maintaining a Buy Rating
One of the most significant insights comes from Carlo Santarelli, a seasoned analyst at Deutsche Bank. In a recent statement reported by CDC Gaming, Santarelli confirmed that Deutsche Bank has maintained a price target of $36 for Golden Entertainment—indicating a premium above the company’s latest share closing price of $31.24. While this figure represents an optimistic view of the company’s future, Golden’s shares have faced considerable pressure, recording a 6.55% decrease over the past six months and a dramatic 22.09% drop year-to-date, translating to a loss of $8.86 per share.
Despite the downturn in share price, Deutsche Bank’s consistent Buy rating underscores a belief in the company’s potential, particularly in light of a possible strategic move involving the sale of one of its properties. This could help Golden Entertainment leverage a leaseback arrangement to improve its financial standing.
Challenges Facing Golden Entertainment
However, the optimism from Deutsche Bank is mitigated by current challenges facing Golden Entertainment. The analyst revised their financial forecasts downwards, largely due to ongoing issues in the Las Vegas gaming revenue sector and other external factors. Specifically, the company has encountered setbacks due to:
- Increased competition on the Las Vegas Strip, affecting its revenue potential.
- An excessively hot summer, which may have deterred beachgoers and locals from frequenting the company’s tavern offerings.
- Higher union contracts that impact operational costs.
- Ongoing challenges within the tavern division, particularly concerning margin and revenue.
These challenges have prompted analysts to carefully assess Golden Entertainment’s operational strategy moving forward.
The Potential Impact of a Sale-Leaseback Strategy
One particularly intriguing prospect presented by Santarelli is the potential for Golden Entertainment to engage in a sale-leaseback transaction. This type of strategy involves selling a property while simultaneously leasing it back for ongoing operations. Though no specific casino resort has been identified for this maneuver, the analysts explored how such a move could impact the company’s financial health.
If Golden were to execute a sale-leaseback with one of its properties, it could lead to an advantageous position by securing $87 million in rental income, derived from an anticipated $174 million in property-level earnings before interest, taxes, depreciation, and amortization (EBITDAR) projected for 2025. Santarelli highlighted that:
“We assume Golden on a 2025 year-end basis would have $130 million of net cash, including the proceeds and capitalizing the $87 million of assumed rent,” he noted, emphasizing the potential financial windfall.
Strategic Decisions Ahead for Golden Entertainment
As it stands, Golden Entertainment has not confirmed or denied any intentions regarding a sale-leaseback. Should the company decide to pursue this route, it would likely involve a rigorous review process, requiring approval not only from shareholders but also from the Board of Directors and pertinent regulatory agencies.
In the coming weeks, all eyes will be on Golden Entertainment as the company navigates its way through challenges while exploring strategic opportunities. With fiscal figures set to be disclosed on November 7, stakeholders will be eager to see how these changes may influence the company’s trajectory going forward.
Conclusion
In summary, Golden Entertainment’s upcoming financial results hold significant interest for analysts and investors amid a backdrop of fluctuating market conditions. The company’s grappling with challenges in Las Vegas and its potential strategic moves could define its future performance. With Deutsche Bank’s implications of a sale-leaseback and maintained optimism, the gaming company is at a crucial juncture that warrants close observation as it moves toward revealing its financial landscape later this year.
