Despite travel restrictions and the shutdown of casinos and other gambling outlets during the worst of the COVID-19 pandemic, the rising popularity and legalization of online gambling and iGaming services have helped the industry rebound since the first COVID-19 wave last year. 

The strong vaccination drive, the lifting of travel bans, and the reopening of brick-and-mortar casinos have helped the industry generate increasing foot traffic to brick-and-mortar casinos and to generate billion-dollar revenues in 2021. The global casino gambling market is expected to grow at a 3.5% CAGR between 2021 – 2025.

Also, lesser-known small-cap casino stocks are gaining momentum owing to their increasing market reach and the provision of enhanced entertainment options. So, we think Golden Entertainment, Inc. (GDEN), Monarch Casino & Resort, Inc. (MCRI), and Century Casinos, Inc. (CNTY) are well-positioned to deliver solid returns in the coming months.

Golden Entertainment, Inc. (GDEN)

GDEN, in Las Vegas, engages in the development, finance, management, and ownership of casino and resort properties and offers gaming, dining, entertainment, and guest services. The company also installs and operates slots and amusement devices in restaurants, taverns, convenience, and grocery stores. It also operates wholly-owned branded taverns that target local patrons. As of March 11, 2021, it had approximately 16,000 slots. It has a market capitalization of $1.45 billion.

On October 4, 2021, GDEN agreed with Flite Golf & Entertainment, one of the leading technology and operational partner to golf venues and ranges, to bring Atomic Range, a new 92,000 square-foot golf entertainment destination, to seven acres of GDEC-owned land adjacent to its STRAT Hotel, Casino & SkyPod in Las Vegas. The move should enable GDEC to offer its guests a new and unique golf entertainment experience and generate good revenues in the future.

GDEN’s total revenues rose 37.5% year-over-year to $282.42 million for its fiscal third quarter, ended September 30, 2021. The company’s operating income came in at $45.22 million, indicating a 378.6% rise from the prior-year period. Its net income was $29.05 million for the quarter, compared to a $6.96 million net loss in the prior-year period. Its EPS was  $0.91, versus a $0.25 loss per share in the year-ago period. GDEN had $219.30 million in cash and cash equivalents as of September 30, 2021.

A $5.17 consensus EPS estimate for the current year represents a 206.2% rise from the prior-year period. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect the stock’s revenue to rise 55.2% year-over-year in the current year to $1.08 billion. The stock’s EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 131.9% in price year-to-date.

It is no surprise that GDEN has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

GDEN has an A grade for Sentiment and a B grade for Growth, Value, and Quality. Click here to see the additional ratings for GDEN’s Momentum and Stability.

Of the 31 stocks in the Entertainment – Casinos/Gambling industry, GDEN is ranked #1.

Monarch Casino & Resort, Inc. (MCRI)

With a market capitalization of $1.34 billion, MCRI in Reno, Nev., owns and operates two hotel/casino facilities: the Atlantis Casino Resort Spa and the Monarch Casino Resort Spa Black Hawk. These facilities offer slot and video poker machines, table games, a race and sportsbook, bars and lounges, dining options, guest rooms and suites, banquet and meeting room space, a concierge lounge, an upscale spa and pool facility, and a parking structure.

For its fiscal third quarter, ended September 30, 2021, MCRI’s net revenues increased 86.5% year-over-year to $111.63 million. The company’s income from operations came in at $29.04 million, up 116.3% from the prior-year period. MCRI’s net income was $22.31 million, up 107.7% from the year-ago period. Its EPS increased 101.8% year-over-year to $1.15. The company had $33.04 million in cash and cash equivalents as of September 30, 2021.

Analysts expect MCRI’s EPS to improve 173.6% year-over-year to $3.42 for the current year. It surpassed the consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to be  $382.43 million for the current year, representing a 107.4% increase from the prior-year period. The stock’s EPS is expected to grow at a  14% rate per annum over the next five years. MCRI stock has gained 10.5% in price year-to-date.

MCRI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.

The stock has an A grade for Sentiment and a B grade for Quality. Click here to see the additional ratings for MCRI (Growth, Value, Momentum, and Stability).

Within the Entertainment – Casinos/Gambling industry, MCRI is ranked #8.

Century Casinos, Inc. (CNTY)

CNTY operates as a casino entertainment company worldwide that develops and operates gaming establishments and related lodging, restaurant, horse racing, and entertainment facilities. As of March 12, 2021, it operated four ship-based casinos. It has a market capitalization of $435.04 million. CNTY is headquartered in Colorado Springs, Colo.

In July, a legal change by Missouri Gaming Commission to a law that required each casino to be a ‘floating facility’ has enabled CNTY’s Century Casino Caruthersville, the last remaining riverboat casino on open water in Missouri, to move to a non-floating facility. The company has purchased parcels of land for the future casino and hotel development, which are expected to open in early 2022.CNTY is looking forward to providing enhanced entertainment services to its customers.

For its fiscal third quarter, ended July 31, 2021, CNTY’s net operating revenue increased 21.8% year-over-year to $116.61 million. The company’s earnings from operations came in at $25.73 million, up 71.4% from the prior-year period. CNTY’s net earnings were $12.38 million, representing a 212.9% rise from the prior-year period. Its EPS increased 176.9% year-over-year to $0.36. CNTY had $100.76 million in cash and cash equivalents as of September 30, 2021.

Analysts expect the stock’s EPS to grow 147.5% year-over-year to $0.77 in the current year. A $388.13 million consensus revenue estimate for the current year represents a 27.6% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect the stock’s EPS to grow at a 25% rate per annum over the next five years. The stock has gained 106.4% in price year-to-date.

CNTY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

The stock has a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for CNTY (Growth, Momentum, and Stability).

CNTY is ranked #2 in the Entertainment – Casinos/Gambling industry.

GDEN shares were unchanged in premarket trading Tuesday. Year-to-date, GDEN has gained 131.88%, versus a 24.39% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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