Golden Entertainment, Inc. (GDEN) on Q4 2021 Results - Earnings Call Transcript

Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.: Operator: 0:02 Good day and thank you for standing by. Welcome to the Golden Entertainment Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised today’s conference is being recorded. . 0:28 I'd like to hand the conference over to speaker today, Joe Jaffoni, Investor Relations. Please go ahead. Joe Jaffoni: 0:36 Thank you very much Victor and good afternoon, everyone. On the call today is Blake Sartini, the company's Founder, Chairman and Chief Executive Officer; and Charles Protell, the company's President and Chief Financial Officer. On today's call, we will make forward-looking statements under the Safe Harbor provisions of the Federal Securities Laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today's press release and in our filings with SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. 1:13 During today's call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation of GAAP financial measures in our press release, which is available on the website. We'll start the call with Charles, reviewing details of the 2021 fourth quarter and full-year results and a business update and following that, Blake and Charles will take your questions. 1:32 With that, it's my pleasure to turn the call over to your host Charles Protell. Charles, please go ahead. Charles Protell: 1:38 Thanks, Joe. Our record performance continued in the fourth quarter with revenue of $282 million and adjusted EBITDA of $68 million, which was over 70% higher than Q4 2020 and almost 60% higher than Q4 of 2019. All of our properties experienced increased visitation and customer spend, particularly at the STRAT. EBITDA margins continue to expand as they increase of approximately 500 basis points from Q4 of 2020, reflecting the measures we have taken to maintain a streamlined cost structure over the last 6 quarters since reopening. 2:16 The fourth quarter completed a year in which we generated more than $1 billion in revenues for the first time in our history. And we also achieved record annual EBITDA up $292 million, despite our record performance, it could have been even better as our operations and customers were impacted by COVID restrictions, supply and labor shortages, and reduced visitation that our team successfully navigated during 2021. 2:42 Before getting into more specifics in our press release this afternoon, we detailed new segment reporting that we believe provides investors with a better visibility to the different types of properties in our portfolio. We now break out the results for Nevada Casino Resorts, which are comprised of the STRAT and our Laughlin properties. Nevada Locals Casinos, which represents our 5 Local Casinos in Las Vegas and Pahrump. Our Rocky Gap Casino Resort in Maryland, and our consolidated distributed gaming operations, which combines Nevada and Montana. 3:15 Revenue for Nevada Casino Resorts in the quarter rose 62% year-over-year to $105 million and EBITDA improved 145% to $37 million. EBITDA margin also improved nearly 1,200 basis points from Q4 of 2020. We saw a dramatic improvement in performance from our script property with a STRAT revenue of 90% and EBITDA up more than 5 times from Q4 of 2020. The STRAT’s occupancy improved to 77% for the quarter, up from 43% Q4 last year. Omicron impacted property visitation late November, December, so our occupancy and performance could have been higher. 3:59 In 2019, the STRAT averaged about 90% occupancy for the year. In 2021, we only average 67% occupancy. This translates into over 180,000 missing room nights, which is 30% more room nights than what we sold in all of 2021 even missing these room nights, we still achieve record revenue and EBITDA, the STRAT. 4:23 Despite the lower visitation I just mentioned, we continue to set record numbers at many of the STRAT venues, particularly at our top of the world restaurant, and our Casino Marketing program is having huge success attracting new players which helped drive a 62% increase in gaming revenue at the property. We continue to make modest incremental investments in the property such as refurbishing the theater lobby to support a revamped entertainment and new residencies refreshing pool areas and renovating some of the older sweep room product to attract higher worth players. 4:56 We believe the return of citywide conventions plus entertainment and sporting events will translate to a further recovery of room nights at the property as we move through 2022 and 2023 and drive EBITDA The STRAT much higher than it is today. For Laughlin properties, revenue was up almost 40% and EBITDA improved over 54% compared to Q4 2020. 5:19 We resumed concerts in Q4 with six shows in the quarter that drove 42,000 guests to our concert venues and increased occupancy and spend at our properties. We anticipate returning to a full concert schedule in the spring, with 6 concerts already booked in the market from March through June. While we have seen some of our older players start to return to Laughlin, we're still missing a meaningful portion of this demographic in the market, which we view as an opportunity going forward. 5:47 We're in a Nevada Local Casinos revenue increased 20% to $40 million and EBITDA rose 32% to $19 million for the quarter. EBITDA margin improved by over 400 basis points to 47% and we're not concerned with the current competitive environment impacting margins in any meaningful way as we move through 2022. 6:08 Our Las Vegas, Arizona, Charlie's properties are growing revenue and EBITDA while sustaining margins in excess of 49%. The promotional environment in the Las Vegas locals market remains rational and while labor is tight, we have been able to maintain our high standards of guest experience. For Pahrump casinos revenue and EBITDA also improved meaningfully over Q4 2020 with sustained EBITDA margins in excess of 40%. 6:35 Turning to Maryland our Rocky Gap Casino revenue was up 28% to $19 million in EBITDA was up 34% to $6 million for the quarter with stable margins at 31%. We've recently renovated all 200 rooms at the property as well as revamped the food offerings and added a sports lounge where we're seeing good traffic flow and increased food and beverage revenues from our guests. 6:58 For distributed gaming operations revenue was up 27% to $118 million and EBITDA rose 45% to $20 million for the quarter. The rapid recovery of Las Vegas has fueled revenue growth for third party and wholly owned Tavern operations in Nevada, while Montana has benefited from adding new third party locations to portfolio and relatively mild weather for its fourth quarter. We are seeing increased demand from the continuing migration of Californians and others to Nevada even to a greater degree than what we see in our Nevada Local Casinos. 7:32 In fact several of our newer wholly owned Taverns were purposely located in areas where we anticipated new residential development. And now those taverns are generally our best performing locations in the portfolio. We haven't spent a lot of time thinking about new tavern development recently. What are we are likely to target 2 to 3 new taverns a year going forward, provided we can establish 8 plus locations like our most recent openings? 7:58 Moving to our balance sheet, in Q4, we continue to repay debt, reducing our term loan borrowings by $25 million in addition to buying back over 10 million of stock. In the last year, we have paid down $132 million of our outstanding debt, including 122 million of our term loan. We ended 2021 with plenty of liquidity with $221 million of cash and no outstanding borrowings on our $240 million revolver, that we upsize in Q4 from $200 million. 8:27 Currently, our total debt outstanding consists primarily of a $650 million term loan, and $375 million of unsecured notes. Our net leverage is approximately 2.8 times position as well to refinance our bonds, which we expect to do in the coming weeks. We leverage below 3 times, we will also be able to accelerate returning capital to shareholders. And we intend to use the remaining $40 million of our current buyback authorization opportunistically over the course of this year. 8:58 We continue to have a very straightforward investment thesis of growing cash flow primarily from wholly-owned gaming assets in Nevada, which we view as the most attractive gaming market in the world today with significant upside in the future. We are not pursuing greenfield development or unproven lines of business, we are solely focused on maximizing the performance from our current portfolio in generating free cash flow that could be returned to shareholders. 9:25 That concludes our prepared remarks Blake, and I are available for questions. Operator: 9:30 Our first question from the line of David Bain from B. Riley. You may begin? David Bain: 9:48 Great, thank you and thanks for the increased transparency with the segments and nice results. I guess, if I could I know that you mentioned several kind of positives on Nevada and, and some growth opportunities with the taverns there. But if we look forward and see that, golden captures a lot of the near-term long-term positives with the portfolio already on the strip and a super hyper local, could future growth opportunities increase in Nevada, with other pockets? Perhaps in other areas in Nevada, just given the balance sheet strength and overall opportunities to leverage assets. Blake Sartini: 10:34 Yes, David. This is Blake. I think – I think the answer to that is yes, we have some whitespace up in Northern Nevada, that particular route could possibly be, a growth opportunity for us. And, as Charles mentioned, we're staying focused – real focused on our current business, our current portfolio to do anything, outside of that would have to be pretty meaningful transaction and that could also occur in Nevada. So, given that we designed, or we put this portfolio together, if you will, which is Nevada centric. I think you can – I think you can infer that we would – we would see growth in the future, within this jurisdiction. Again, if it was in a meaningful format. David Bain: 11:29 Okay, great. Sorry, for the background noise. I just have one more, looking at the increasingly higher valuations for real estate, arguably your land is worth around your market cap. I mean, how do you weigh corporate action, just given recent valuations there and in Nevada and elsewhere? Blake Sartini: 11:52 Yeah, look, that's, that's been top of mind right for everyone in the business recently, as recent transactions have provided some pretty solid valuation metrics. As I've said in prior calls of your current real estate holdings is as optionality for us as well as tangible and significant underlying value for our shareholders. And as you know, that underlying value continues to grow. With that, I'll say at this time, we're not – we're not considering anything other than maintaining our current real estate portfolio as it is, but that underlying value, I think is significant and I think it's anymore valuable as time goes on. Charles Protell: 12:35 Yes, I would just add to that, I mean… David Bain: 12:37 Okay. Go ahead. Charles Protell: 12:38 class becoming more accepted for written investors in the last regional trade, was it 17 times and the one before that was it 15 minutes earlier. And now you're seeing new entrants rather than the traditional gaming rates. So you over time, you're gonna find that I think that the gaming REITs trade up more in line with their, with their peers, which means their cost of capital is lower, and they could pay more for our real estate. So our thesis is only real estate is so far paid off, I'd say never say never. But right now, we're going to be patient around the value in the backstop that provides for us relative to our current valuation in the market. David Bain: 13:20 Awesome. Thank you, guys. Charles Protell: 13:25 Thanks, David. Operator: 13:25 Our next question comes from line of Carlo Santarelli from Deutsche Bank, you may begin. Carlo Santarelli: 13:32 Hey, guys, thanks. And good evening. I heard a little bit Charles in your prepared remarks, and you talked a little bit about some of the impact of the variant in November and December, obviously, some peers have talked about more so stripped peers have talked about the impact of the variance on the first quarter, and things like that anything that you guys would flag as it pertains to your Las Vegas business or the STRAT specifically in first quarter? Charles Protell: 14:00 Yeah, we definitely saw that the first two weeks in January and so that's where we saw a little bit of softness relative to where we've been in the past, similar to every others on the strip, we did see a pretty packed Super Bowl weekend and beyond and Presidents Day weekend looks to be the same. So we're encouraged about the balance of the year, but there is no doubt there is an impact in the beginning of January. Carlo Santarelli: 14:25 Okay, great. Thanks, Charles. And then just as it pertains to Laughlin and kind of the event calendar there, as you look out over the rest of the year, do you believe at some point this year, maybe its second half, we'll get back to kind of the normal cadence of events at that asset or at that asset base? I should say? Blake Sartini: 14:45 Yes, Carl, I think, I think we're, we're, we're beginning to see that now. The answer your turn to answer your question is yes, we're putting our first major concert, I think comes the first week in March. And we're in, so we're establishing already a pretty significant entertainment rotation down there, that, that you'll see increase into the fall of this year. So that's already occurring, and we anticipate that'll bring positive results earlier than earlier than the fall of next year. As I said, I think it'll begin in March of this year. Charles Protell: 15:17 Yes, we're excited about the first six acts that we have that are coming up in the spring and then it's too early for the bookings for the fall. But obviously, we're working on this, and we expect to have a full slate heading into the fall as well. Carlo Santarelli: 15:32 Great, thank you, guys. Charles Protell: 15:34 Thanks, Carlo. Operator: 15:38 Our next question comes from the line of Omer Sander from JPMorgan. You may begin. Omer Sander: 15:42 Hey, Blake and Charles, thanks for taking the question. First, when you look across your portfolio, and here, you're encouraging commentary on the STRAT, if any customer segments or additional amenities that you're missing today, that you're looking in online? Blake Sartini: 15:57 Yes, so, as we – as we stated early on in our capital investment in that property, we wanted to provide an environment that that enabled our guests to stay longer and spend more, versus the prior property, which was essentially transitory in terms of people coming and staying and visiting other parts of the city. So as we built out, let's call it this phase one of, I think, $100, $110 million in investments so far, that stickiness is showing results, we're seeing higher spend, we're seeing higher time on property. And as we move forward, I think you'll see us target, very efficient capital, that will allow more of that stickiness, which may mean, we were seeing right now, more food outlets are something that we need on that property, which is a good thing keeps people around. You're seeing more entertainment and new entertainment that we're providing at that property. We just did a modest upgrade to the kind of the public area outside of our showroom, to enable a better experience. 17:05 We will continue to improve top of the world and over time, you'll see us continue to invest in a room product, including fleet, which we believe we can attract a little bit of a higher end customer now with the positives that we've seen with our early results out of our initial investments. So I would say food facilities, entertainment, you're aware of our time atomic range, golf program that we intend to put north of the property. We anticipate that coming or beginning in the second quarter of this year. So yes, we will continue to add on as we see that that demand and the good news is we're beginning to see that demand for these types of additions to the property. Charles Protell: 17:50 One thing that we're not going to chase is we're not going to chase building a big convention center adjacent to the property. So we feel that we're perfectly located next to the existing Convention Center, we feel that there's properties around us that can provide that we're looking for more for the niche for the spillovers from that, and that's what we've seen and that's where we've had a lot of success. So we're gonna stick with that. Omer Sander: 18:15 It totally makes sense. Thank you. And one follow up maybe on free cash flow, you generated $200 million free cash flow for the year, but $650 per share, and you've started buying back from the stock, and it doesn't look like there's any major CapEx as evidenced by your convention commentary there. How do you think about potential interest savings from this refi? And then more broadly about capital return priorities going forward? Charles Protell: 18:39 Yeah, I mean, look, we think we could target roughly $15 million of cash interest saving, so you could put whatever cap rate you'd want on that relative to that's, it at 650 a share, and it ends up being is substantial for us, take that, in terms of how we think about CAP allocation at free cash flow going forward, we view it as a balance for investing in our own properties. We're going to be focused on it, like we said, getting through the $40 million that we have in the buyback authorization, and we'll also deliver. So, I think that, now we're in the fortunate position, where we get to make those choices opportunistically based on where we think we have the best returns. Omer Sander: 19:24 Thanks so much. Operator: 19:29 Our next question comes from the line of David Katz from Jefferies, you may begin. David Katz: 19:32 Hi, afternoon, candidly, I was going – I would like to pursue, a little farther, some of the prior questions, one of which is, how would you have us think about, putting in some cap acts as a bogey, right, it sounds like there may be some more projects, whereas, we may have been thinking about pretty much of baseline maintenance number. before you mentioned something, right? Charles Protell: 20:06 Yes. We finished up the year at about $30 million of CapEx, which was pretty much maintenance, and quite frankly, probably a little bit light coming out of COVID, not quite sure where we were gonna be. So I think going forward will be somewhere between $40 million to $45 million on a CapEx perspective and that will include that concept of 2 to 3 taverns that we talked about, it'll include some new slot capital, as we look out over the course of this year, but it's not going to include any major development projects. Those are, that's not what we're pursuing. Blake Sartini: 20:38 Yeah, David, to give a little more clarity on that. It's important, I think it's important to be clear and understand, we are committed to a disciplined and efficient approach to our capital. So in regards to for example, the STRAP, when I was talking about food facilities are modest upgrades to entertainment areas, those are $2 million, $3 million, $1.5 million type projects that are in that number that Charles just outlined. The atomic reigns, for example, as you're aware, is capital life to us and that we aren't putting any capital until we're simply using our real estate as collateral there. 21:17 So we are continuing a disciplined approach to our capital, and there are not outside of rooms which aren't coming this year, right, we are doing some design and maybe some modest remodel, but a full room kind of remodel project would take on a bit more in terms of capital. But just to reiterate, those things that I mentioned previously are not outside of this framework of capital that Charles talked about. 21:44 So the $40 million to $45 million is, that's not a maintenance number. That's an all-in including some new taverns, etc, etc. Blake Sartini: 21:51 Yeah, our maintenance, our maintenance is $30 million to $35 million depending on what's going on in the year. David Katz: 21:58 Got it. So, look, if I, just what whatever I might reasonably have in a model based on that. I mean, the cash really starts to pile up, pretty quickly throughout this year and certainly into next year. I mean, $40 million seems like an eyedropper fall at the end of the day. Blake Sartini: 22:24 Yes. David Katz: 22:27 Okay. I think we're both looking at the same thing and so then the options become what, what, what to do with it and or when to do it? Charles Protell: 22:36 Yes, that's right. And there's lots of ways to return capital to shareholders primarily, right through buybacks or dividends. And so your look and we didn't, yes, there's no – there's a science to mind, you could go back to the board for a buyback authorization. It's not something that we need to do or wait till the end of the year to do but we have authorization now. We have a refi that we intend to pursue, and we want to maximize the execution of that refi. And in then again, we're going to pursue a balanced approach of investing in our existing properties, returning capital to shareholders, and maintaining a low leverage position. And we think that's the best path forward to create value. David Katz: 23:18 Agreed one last one, if I may, I mean, we'd never be talked about these things in absolute terms. But, the prospect of some meaningful acquisition, that my redirect what we just talked about, my impression has always been that those probabilities are relatively low. Would you – is that still true? Charles Protell: 23:42 Yes. I mean, look, we feel – I mean, the path we outlined is really the highest risk adjusted return we could create for shareholders. There's a lot of execution risk in those other paths. And quite, so the bar has to be very high, almost to the no brainer level for us to pursue those types of things. David Katz: 24:03 Perfect. Thank you very much. Blake Sartini: 24:06 Thank you. Operator: 24:07 Our next question, offline is Chad Beynon from Macquarie. You may begin. Chad Beynon: 24:13 Good afternoon. Thanks for taking my question. Charles, you gave us some statistics on occupancy at the STRAT. Just wanted to dig into that a little bit more is that still, a midweek versus weekend bifurcation? And we've heard some positive commentary from some of the other strip property operators just in terms of when, convention business and some international could pick up, but just wanted some clarification on that and then, when you think, you can really start to get some good compression room nights, midweek. Thanks. Charles Protell: 24:52 Yes, it is predominantly that the lack of midweek business that is creating that deficiency. We're still seeing visitation, it's on the weekend at the same or roughly the same rates. I think that we're looking forward to as we get into March and into April, NAV being the first major city wide convention that's coming into town, what that does for us in terms of being able to compress rates, not only during the week and sell more rooms, but also as people stay over to the weekend. So I think it'll get this pretty visible here, as we get into Q2, what the attendees are for those conventions and what the impact is on the city, combined with what we're seeing is continued very strong retail demand, particularly when there are events that are happening in the city. Chad Beynon: 25:40 Gotcha. Thanks. And then on margins, sounds like you're pretty crystal clear in terms of the stability of that, but just wanted to ask about inflation, mainly from the labor side, full time employees, is that under control, kind of within your portfolio, understanding that it's, dynamic situation, given where the service industry has been over the past 3 to 6 months. Blake Sartini: 26:09 Yes, Chad, I think that is static going forward. There is – there will be as volume picks up as occupancies pick up and things like that we will add cost to the business, but at the same time will add revenue to the business. So, we are – we are pretty confident – very confident, as a matter of fact that we can maintain what would be outsized margins, if you will, versus historical 2019 and prior, going forward, and I'll steal a line from someone I forgot who said it, but we're not on a diet here. We made a lifestyle change. So this lifestyle change will continue through full visitation as Charles talked about, and we're confident we can maintain these outsized margins compared to historical. Charles Protell: 27:07 Yes, we experienced big labor costs increases in June, July. We saw that through it, and that's really been reflected fully in Q3 and Q4 numbers, I think you got to keep in mind that pre pandemic, we had 8,000 employees, and now we have 6300. So we're down over 20% in the labor force, giving more revenue and more EBITDA. So while those increases have been there, our overall labor costs in aggregate are down. Chad Beynon: 27:43 Thanks, Charles. Thanks, Blake. Appreciate it. Operator: 27:48 Our next question comes from the line of Edward Engle from Roth Capital, you may begin. Edward Engle: 27:55 Hi, thank you for taking my question. We look at spending from how's it going? When you look at spending from your older demographics in the fourth quarter, call it ages 60 plus, is there any way to quantify how much room is left for that segment to recover versus 2019? Charles Protell: 28:13 Yes, I'd say, it varies by property and she the – where we see that the most noticeably is in our Laughlin assets. So we're probably down I call it, 10% to 15% of rated gaming revenue for the asset and most of that being attributed to that older demographic. So, that's why we see it just as a huge opportunity for us going forward as they get more comfortable and begin to come back. I mean, most of the other properties, here we look at the locals, you look at our taverns, passivity business, those are generally back, I think there's pockets and times you could point out to, but there's a real missing piece of real worth customers and businesses at a Laughlin, that is starting to trickle back in. And we just see that accelerated through the year. Edward Engle: 29:06 Great, thank you. That's helpful. And then if I kind of shift to your refinancing, and I guess, I know focus on the term loan you currently have, what's the cost, the cost sensitivity for that on rising interest rates and that gets with any upcoming refinancing? Would you kind of use that to maybe as an opportunity to lock in some longer fixed rates? Charles Protell: 29:28 Like most, most term loans, including ours, they have a LIBOR flow, even though they're a floating rate debt instrument, they have a floor in it. And our floor is 75 basis points. So it's an excess that we're LIBOR was trading at right now by at least a 25 basis point margin. Think when you do a refi, you move to a new indicative rate. And that rate is actually lower from what we're getting from both indicative perspective and for perspective, so guide net-net, that's why I'm comfortable talking about targeting that $15 million of cash interest savings. 30:03 And the bank market and the leveraged loan market right now is actually fairly strong in a rising rate environment versus the bond market. But look, we're working on that, we're working to get out as soon as we can. And there'll be more to report on that when we're done. Edward Engle: 30:22 Terrific. Thanks and congrats on good quarter. Charles Protell: 30:25 Appreciate it. Operator: 30:28 And I'm not showing any further questions in the queue. I’d like to turn the call back over to Mr. Protell for any closing comments. Charles Protell: 30:36 Okay. Thanks, everyone, for joining us, and we look forward to updating you next quarter. Operator: 30:44 And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
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Golden Entertainment, Inc. (NASDAQ:GDEN) Q1 2024 Earnings Insights

Golden Entertainment, Inc. (NASDAQ:GDEN) recently held its Q1 2024 earnings conference call, drawing attention from investors and analysts alike. The call, detailed by Seeking Alpha, was a platform for the company's top executives, including Joe Jaffoni, Charles Protell, and Blake Sartini, to discuss the financial outcomes and strategic directions of GDEN during the initial quarter of the year. Analysts from prestigious firms like B. Riley, Truist, Deutsche Bank, and Macquarie participated, highlighting the significant interest in Golden Entertainment's performance and future prospects.

One of the key financial metrics discussed was GDEN's price-to-earnings (P/E) ratio, which stands at approximately 3.43. This figure indicates that the company's shares are trading at a relatively low price compared to its earnings, suggesting that the stock might be undervalued or that the company is performing well relative to its share price. This is a crucial piece of information for investors, as a low P/E ratio can often signal a good buying opportunity, assuming the company's fundamentals are strong.

Another important metric is the price-to-sales (P/S) ratio, which is about 0.83 for GDEN. This suggests that the stock is also reasonably valued based on its sales, providing another indicator that the company's stock might be a good investment. The enterprise value to sales (EV/Sales) ratio of roughly 1.40 further supports this, indicating that the company's valuation in relation to its sales is moderately priced, neither too high nor too low.

The enterprise value to operating cash flow (EV/OCF) ratio, at approximately 12.41, is particularly telling. It shows how the market values the company's operating cash flow, which is a critical measure of financial health and efficiency. A higher ratio could indicate that investors are willing to pay more for each dollar of cash flow generated by the company, suggesting optimism about its future growth prospects.

Lastly, Golden Entertainment's debt-to-equity (D/E) ratio of about 1.26 and a current ratio of approximately 2.35 provide insights into the company's financial stability. The D/E ratio shows a balanced approach between debt financing and equity in the company's capital structure, indicating a moderate level of risk. The current ratio, on the other hand, suggests that the company has a healthy ability to cover its short-term liabilities with its short-term assets, which is reassuring for investors concerned about liquidity and financial resilience.

Golden Entertainment Started With a Buy Rating at Truist Securities

Truist Securities analysts initiated coverage on Golden Entertainment (NASDAQ:GDEN) with a Buy rating and set a price target of $45 on the stock. The analysts outlined their investment thesis on the company, emphasizing a return to fundamental strengths in the Vegas market. They noted that following recent asset sales, Golden Entertainment has transformed into a Nevada-centric operation poised to benefit from the region's positive demographic trends and a favorable, low-tax regulatory landscape.

With the completion of recent construction and the easing of labor challenges, analysts anticipate robust growth in EBITDA and free cash flow. They also pointed out that the company's current market valuation does not fully account for the expected improvements in business performance, the significant reduction in financial leverage, or the security provided by real estate holdings. The analysts believe the management is strategically positioned to enhance shareholder value through both organic growth and potential acquisitions, along with increasing returns to shareholders.