Las Vegas' ags shares are up 11% after recording $12.1 million more in revenue than forecasted
The effects of the coronavirus continued to impact electronic slot and bingo machine maker according to ags. Even though most casinos reopened after their shutdowns, losses increased and revenue continued to decline in the third quarter. Such results still seemed to satisfy investors, who sent the shares up 11% in after-hours trading as the numbers were still able to surpass forecasts by Wall Street.
The Las Vegas based company issued a statement after the stock market closed on Thursday, they mentioned that net loss amounted to $11.1 million, or 31 cents per share for the three months ended Sept. 30 when compared with net income of $5.5 million, or 16 cents per share during the previous year.
Analysts, surveyed by Seeking Alpha, had forecasted an average of 62-cents-per share loss. Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, rose 26.6% to $27 million from $36.8 million a year earlier.
However, revenue decreased from $79.4 million to $49.3 million managing to top the $37.2 million forecast of Seeking Alpha-polled analysts. Ags further stated that disrupted lease revenue from inactive electronic game machines and a year-to-year decline in its installed base factored in the lower revenue.
Ags also determined that its domestic electronic gambling machines added up to over 14,500 in all and were active at the end of the third quarter. The company mentioned that its electronic gambling machine base decreased by 1,900 units year-over-year, due to the sale of 476 previously leased, lower-yielding Oklahoma units to distributors and the removal of 350 machines from action because of restrictions set by lawmaker due to COVID-19.
David Lopez (pictured), CEO of ags outlined within a statement that the pandemic had actually strengthened its staff’s resolve and made the company nimbler.
Lopez said, “Improved hardware and game content position us to command our fair share of future unit placements,” he continued to add “I remain encouraged by the strategic growth opportunities emerging within our table games segment and look for our interactive performance to continue to improve as additional states contemplate the introduction of real money online gaming legislation.”
Analyst for Roth Capital, David Bain, lifted his ags price target to $8.50 partially because of the company’s improved game performance. Ags CFO Kimo Akiona, expressed that the third-quarter financial performance and liquidity position, amounting to $113.2 million in available liquidity as of Sept. 30, allowed it repay its $30 million revolver. He added that the company’s revamped base of cost should carry forward as revenue increases.
“We view ags’ (calendar year) 2021-22 46% to 47% discount-to-peer average enterprise value/EBITDA as unsustainable, particularly amidst above-consensus performance and structural cost improvements,” Bain wrote in a note, “leaving significant share price upside.”
The price target imposed by Roth implies that shares should trade at 5.75 times the 2022 enterprise value. ags shares rose 21 cents, or 6.75%, Thursday to close at $3.32 on the New York Stock Exchange. The shares rose 38 cents, or 11.5%, to reach $3.70 at 5:30 p.m.
Source: CDC Gaming Reports
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