Full House Resorts Could Be Earnings Winner Thanks to New Casinos

Posted on: January 12, 2023, 02:01h. 

Last updated on: January 12, 2023, 02:18h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Full House Resorts (NASDAQ: FLL) could deliver earnings per share (EPS) growth this year, as the operator opens two new casinos to the public.

Full House Resorts
A rendering of Full House Resorts’ Chamonix in Cripple Creek, Colo. It’s one of the venues that could power earnings growth for the operator. (Image: Full House Resorts)

That’s the sentiment of CBRE analyst John DeCree, who restarted coverage of the regional casino company today with a “buy” rating and a $14 price target. That implies upside of 64.7% from the Wednesday close, and a 7.5x multiple to the gaming firm’s fiscal 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates.

Calling Full House an “under the radar” gaming idea, the CBRE analyst said 2023 could be a significant year for the company as it opens the American Place in Waukegan, Ill., and Chamonix in Cripple Creek, Colo. A temporary version of the Illinois casino will open at some point this month, while Chamonix is slated to open its doors by the middle of this year.

On a conference call last November, Full House CEO Dan Lee said American Place will be larger than the current version of the company combined, and it’s possible that will be true of the temporary venue as well. In addition to American Place and Chamonix, Full House runs a pair of gaming properties in Nevada, one in Indiana, Bronco Billy’s in Cripple Creek, and the Silver Slipper in Mississippi.

Full House Could Deliver for Investors this Year

Some analysts believe Full House is the next regional gaming operator of scale, following in the footsteps of the likes of Bally’s (NYSE: BALY), Golden Entertainment (NASDAQ: GDEN), and Eldorado Resorts, which is now Caesars Entertainment (NASDAQ: CZR).

While those are bold comparisons, it’s not out of the realm of possibility that Full House will one day be closer to those rivals in terms of size. American Place and Chamonix will figure prominently in that effort.

With a significantly improved EBITDA and asset base following these two new openings, FLL should reach critical scale, gaining considerably more financial flexibility with greater operating synergies and more efficient access to capital. This will allow the company to continue its growth trajectory beyond these two projects,” wrote CBRE’s DeCree.

Regarding American Place, some analysts estimate the project could add $55 million to Full House’s EBITDA, and as much as $4 to the operator’s share price over the long term.

New Full House Casinos Have Advantages

Both American Place and Chamonix have perks that could propel Full House’s earnings power. The Illinois venue is located outside the Chicago suburbs in an area where casino penetration is relatively low. That indicates the operator could enjoy geographic benefits.

Chamonix could be a catalyst in its own right, not only because Colorado’s gaming market is rapidly growing, but also because the Full House property will be high-end — something currently lacking in Cripple Creek.

Prior to today, five analysts covered Full House, all with “buy” or “strong buy” ratings. The average price target on the shares was $12.20.