Why Pushing a Few Chips Onto Monarch Casino & Resort Could Be Risky Short-Term, Profitable Long-Term
Casino traffic is surging after the end of COVID-19 lockdowns, but Monarch Casino & Resort (NASDAQ: MCRI) remains overshadowed in the news by giants such as Caesars Entertainment (NASDAQ: CZR). Nevertheless, this plucky family owned casino company with a $1.15 billion market cap shows a healthy growth trajectory in its latest results. But with news about the delta variant, there's one potential landmine lurking in its balance sheet potential investors should be aware of.
First and foremost among Monarch's positive attributes, it's bringing home the bacon in terms of both the top and bottom line. Even among companies rebounding from pandemic lows, its 544.8% leap in revenue from $15.16 million in the second quarter of 2020 to $97.72 million in Q2 2021 stands out. Zooming out to the first six months of the year still shows a 161% year-over-year rise in revenue. Despite having just two locations, one in Black Hawk, Colorado, and the other in Reno, Nevada, the company's diluted earnings per share came in 86% higher year over year, jumping from $0.50 to $0.93. EPS rose 54.6% for the six months ending June 30.
Some of the boost apparently comes from the Black Hawk City Council allowing more games and lifting a previous ban on wagers above $100. With a new poker room and removal of betting limits, CEO John Farahi said the "property as a whole is experiencing capacity constraints during peak demand" -- a good problem to have, and one the company is addressing with a remodel intended to "increase casino space by approximately 25% and restaurant seating by approximately 35%" by the end of 2021.
Source Fool.com
