Pinnacle Outperforms in Regional Markets

The Vegas-based gaming company, which has no casinos in its home state, is doing great in regional markets. Its $2.8 billion acquisition of Ameristar has paid off big-time, with impressive 4Q results.

Up 77 percent in most recent quarter

Since Pinnacle Entertainment acquired Ameristar Casinos for $2.8 billion in 2013, it is exceeding analyst expectations for market performance.

Pinnacle now controls 14 casinos in nine states and has $2.4 billion in annual revenue. At the time of the buyout, the company sold two assets to avoid monopoly concerns. The Ameristar casino, now in development in Lake Charles, Louisiana, was sold to Golden Nugget. And Tropicana Entertainment bought Pinnacle’s Lumiere Place in St. Louis.

According to the Casino City Times, the company, which employs more than 15,000 people, has become a favorite of analysts in the regional gaming market and a stronghold in the South, the West and the Midwestern United States.

Robert Shore of Union Gaming says the company’s management savvy, available cash flow and a cost saving of $26 million annually following the Ameristar merger should safeguard it against any financial headwinds.

“There is further opportunity for property- level margin improvement, systemwide revenue drivers and additional cost synergies,” Shore told investors. “The longer-term story is promising as the cost structure of regional assets has been streamlined and any future top-line gains will essentially translate directly into cash flow.”

The numbers support his view. Pinnacle recently announced a 77 percent increase in fourth-quarter revenues, the first full quarter that factored in the Ameristar properties.

Pinnacle “remains our top pick in regional gaming,” said Macquarie Securities gaming analyst Chad Beynon.

Pinnacle did not rebrand its Ameristar properties. “The Ameristar name has a loyal following,” said CEO Anthony Sanfilippo. “We’re not rebranding any properties because we saw no reason to change the names.”

Pinnacle is getting ready to roll out a new loyalty card that will enable members to enjoy rewards at all 14 casinos.