New Isle of Capri CEO Eric Hausler said in his company’s quarterly investor conference call that he’s excited about fiscal year 2017, which started May 1.
And well he should be.
For the first time in a very long time ISLE is no longer a regional casino operator so burdened by debt that its price-to-sales ratio was depressed well below 1 to 1.
Indeed, ISLE’s ratio of debt-to-EBITDA of 4.4 times is now below that of most casino operators and it’s headed down towards the upper 3s to low 4s, Hausler said.
That means investors can begin to value ISLE on its ability to generate earnings. With adjusted earnings per share up to $1.26 last year and 62 cents in the fourth quarter, there appears to be plenty of room to get the stock price up to where that price-to-sales ratio is far beyond its current 0.6-to-1.
It also means that ISLE can look to grow like a conventional company, a fact Hausler addressed in the conference call when he talked about parameters for buying casinos, expanding into new jurisdictions, upgrading properties and upgrading casino floors.
In turn, that brought some cautionary advice from analysts. In other words, after so long in the wilderness, ISLE remains something of a show-me stock even after growing EBITDA and EBITDA margins in eight of the past nine quarters.
However, investors waiting too long to be shown could risk missing the best part of the ride.
NHL Now, NFL Next?
The association between gaming and professional sports is changing rapidly, with the most recent and biggest illustration being the NHL’s decision to put a hockey team in Las Vegas.
Now, if the NFL Oakland Raiders decide to put their football team in LV, the old stigma attached to Vegas because of gaming will be removed for almost everyone.
The next step would be to legalize sports betting, a move that is also gathering momentum as no less than NBA Commissioner Adam Silver says it should be legal, and formerly staunch anti sports-betting organizations of Major League Baseball and the NFL now publicly say it should be reconsidered.
If sports betting is broadly legalized, it will generate a material new revenue stream for casino companies both directly from sports betting itself and in the form of other spending by increased visitation to casinos.
It would also open the U.S. to foreign sports book companies that have planted their flags in America, most notably William Hill and Paddy Power Betfair.
William Hill already has a sports betting and sports book network in Nevada, is risk manager for Delaware’s NFL parlay betting, and has a deal to operate the sports book at Monmouth Park in New Jersey if and when that state opens up.
PPB operates account wagering firm TVG and intends to launch exchange wagering at Monmouth Park.
Filling Up On Full House
Full House Resorts is a little casino operator primarily of interest to micro cap investors.
For those who do dabble in small companies, FLL insiders are sending the message that the stock is attractive at recent prices.
CFO Lewis Fanger bought 5,500 shares at $1.60 each and director Craig Thomas bought 7,400 shares at $1.68 a piece.
Two old sayings apply to such purchases:
• There are lots of reasons to sell stocks, but only one reason to buy – insiders expect the price to rise.
• Purchases by directors are almost always significant because they don’t buy to send messages. They see higher prices ahead.