Monarch Casino & Resort Mulling Acquisition Opportunities

Monarch Casino & Resort (NASDAQ: MCRI) is considering opportunities to add together to its two-property portfolio via acquisition.

Co-Chairman and CEO John the Evangelist Farahi made comments to that gist inward the company’s second-quarter earnings press out release, which was published on Wed after the closely of US markets. Reno-based Monarch currently owns the Atlantis in its rest home city and its eponymic venue inward the fast-growing Negro Hawk, Colo. market.

We keep to judge potency acquisition opportunities where we tin can employ our developmental and operational expertise inward a financially prudent manner,” said Farahi inward the statement.

Farahi didn’t lucubrate on specific regions in which Monarch is considering entering, nor did he say whether or not the society has held talks with potency sellers.

Monarch Could Be Buyer … or Seller

Monarch Casino unsympathetic the secondment canton with $35.1 billion in hard cash on hand. That’s a nice tally for a company with a market capitalization of $1.41 billion, but single that also implies the manipulator would potential demand to government issue debt or equity to strike an acquisition.

As for the prospects of Monarch striking a business deal over the nigh term, anything is possible. However, management is believed to live extremely selective, which is to investors’ benefit, and the stream high-interest rate environs doesn’t contribute itself to debt-fueled mergers and acquisition activity.

“Management’s stringent requirements makes executing an acquisition tricky inwards the represent M&A environment, though not impossible, patch MCRI’s equipoise sheet flexibleness could afford unique purchasing opportunities inward a hypothetical downturn,” wrote Stifel psychoanalyst Jeffrey Stantial inward a tone to clients.

Stantial added that Monarch could live a takeover butt owing to “quality assets and unclear long-term taking over plans.” He rates the stock up a “buy” with a $91 toll target, implying upside of 30.5% from stream levels.

Where Monarch Could Look for Deals

Assuming Monarch doesn’t require to add a prop in the markets in which it already operates, the force field of prospective regions thins and grows smaller when considering the fellowship in all probability isn’t a contender for a Las Vegas Strip asset.

Management is likely to go on to “target an underinvested asset inward a quality securities industry (stable supply; sensible revenue enhancement rate; local economical ontogeny drivers). These opportunities are more special and barring macroeconomic headwinds evoking incremental opportunities,” observed Stantial.

In terms of favourable assess trades and growing local economies, Northern Nevada and Colorado’s deuce-ace gaming markets of Shirley Temple Black Hawk, Central City, and Cripple Creek scene the bill. Those areas also feature the welfare of existence inward states with rising populations, a polar trait for regional casino operators.

Conversely, other large gaming states, such as Illinois and Louisiana, are shedding population. However, LA has the welfare of neighboring Texas, which doesn’t let cassino gaming.

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