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 | May 03, 2012 | 11:30 AM EDT
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The casino space has had a lot of visibility in the last week or two, especially gaming concerns with large operations in Macau, the biggest gambling hub in the world now. Las Vegas Sands (LVS) posted results that were much better than expected, but the stock sold off after earnings posted. This was probably the result of the strong run up in the stock in the month prior to earnings. The other concern that investors seem to have is that growth in Macau is slowing, probably due to other casino properties opening there. Interestingly, its property in Singapore, Marina Bay Sands, had a blowout quarter with revenues up 45% year over year. Its Vegas properties also had a very strong quarter and grew revenue north of 25%.

The other big announcement in the industry was that Wynn Resorts (WYNN) received government approval to build another casino in Macau. While these two casino heavyweights dominated the news, several small domestic casino operators reported much better results that speak to a recovery in the North American gaming market. Here are some earnings reports investors might have missed on three companies that look like good long-term bets.

Pinnacle Entertainment (PNK) operates several smaller casinos in Louisiana, Indiana and Missouri. It was formerly known as Hollywood Park. Key highlights from its earnings report include:

  • Reported record revenues and earnings on May 1.
  • Adjusted earnings came in at $0.33 per share compared with $0.13 in the same quarter a year ago.
  • Revenues were up nearly 5% to $293 million.
  • Consolidate EBITDA was up more than 19% to nearly $75 million.

Three reasons Pinnacle still has value at $11 a share:

  • Analysts expect 7% to 9% revenue growth in both 2012 and 2013, and the stock has a five-year projected Price/Earnings/Growth ratio of less than 1 (0.88).
  • Insiders have purchased more than 300,000 net shares in the past nine months.
  • The stock is selling below analysts' price targets. The median price target of the 16 analysts that cover the stock is $15 per share, roughly 30% above current prices

Ameristar Casinos (ASCA) develops, owns, and operates eight casinos and related hotel, food and beverage services in seven markets. Key highlights from its earnings report include:

  • Adjusted EPS improved by $0.34 to $0.75 year over year, $0.12 above the consensus estimate.
  • Announced pending acquisition of Creative Casinos of Louisiana.
  • Posted record EBITDA, as well as adjusted EBITDA margins and EPS.

Three reasons Ameristar is a buy at just under $20 a share:

  • The stock has a very low five-year projected PEG of 0.38, sells at 53% of revenues and just over 8x forward earnings.
  • The planned construction of its new $500 million Lake Charles casino/hotel/spa project will be the biggest property for the company and should shift revenue and earnings growth significantly when completed.
  • The mean price target of the 14 analysts that cover the stock is $24.50 a share.

Dover Downs Gaming & Entertainment (DDE) operates the Dover Downs Casino, a 165,000 square foot casino complex featuring popular table games comprising craps, roulette and card games. It also owns and operates the Dover Downs Hotel and Conference Center, a 500-room hotel and Dover Downs Raceway. Key highlights from earnings report include:

  • Revenues improved 7.6% to $64.1 million from a year ago.
  • Earnings came in at just over $2.4 million, or $0.07 per share, compared with a loss of $38,000 in the same quarter in 2011.
  • Occupancy at the Dover Downs hotel averaged an impressive 89% compared with 85% a year earlier.

Three reasons DDE is a value buy below $3 a share:

  • The stock provides a robust dividend yield of 4.4% and is priced at around 6x operating cash flow.
  • DDE is cheap at just 81% of book value, 38% of annual revenues and 9x forward earnings.
  • The stock is selling near the bottom of its five-year valuation based on price/book, price/sales and price/cash flow.

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