There really hasn't been much activity in UWN after the conference call. That has got me to thinking, when is UWN going to move?
I am going to guess that UWN is probably dead money UNTIL:
They show that AS A COMPANY, they are cash flow positive AND are making a solid profit. By solid profit, I mean more than .01/share per quarter.
They almost made it this last quarter...maybe this upcoming quarter they will be break even, and the quarter after that, they'll be posting a profit.
A land sale, or new management contract, or buyout of another mini-casino or two could start the stock moving.
It is incumbent on management to do the following:
A). Increase business in current properties
B). Reduce expenses
C). Post a profit
D). Continue asset disposition
E). pay down/refinance debt
F). Acquire/build new properties
If management can do 3 of the above, the stock will start to move. If they can do 4 of the above, the stock will STRONGLY move higher.
Of course, once the stock starts moving, it will be "too late" to make a killing.
The debt is due to the bank of Louise Rogers (wealthy individual who is also a major shareholder). This was a source of credit even when UWN was on the verge of bankruptcy years ago. I would guess that UWN should get a better rate (probably from a more traditional lender) as they show improving results. Based on the likely EBIDTA multiple, UWN certainly does not appear to be over-leveraged IMO.
Not a bad list of UWN catalysts. IMO UWN will move when either they:
- report a profitable quarter which I think should happen this quarter or next.
- announce financial backing for LV Speedway project which is really a wild card and could happen at any time.
Wow--quite the debate going on.
To dtejd1997 (aka Roberto) author of the initial post== this is a well thought out point of view.
I agree with Mr P.-- a profitable quarter or a new financing announcement will make the stock "spike." As far as profitability I again agree that it is coming and it is either this quarter or next quarter.
One thing that I am keeping in mind with the upcomign 10Q is that UWN reorganized and laid off more excess management in Nov, Dec and early Jan. Thus--the money saving efforts that have been underway since UWN overtook operations of the Washington Gold II casinos will not be fully evident until next quarter.
I am optimistic for a good quarter but I definitely will not be turned off to this stock if there is a penny or two a share loss. I think management will be wanting to avoid that happening though because investment banks will be scrutinizing the upcoming 10Q to see if UWN is a good risk for refinancing debt.
And remember everyone: UWN's revenue will again be more than double of last year's numbers due to the purchase.
Good luck everyone
You really should read the 1/12 presentation that is posted in the investor relations section of the company's web site. I was impressed and bought alot of shares. Some key points in the presentation were:
- graph on page 8 showing recent improvements in Grande EBIDTA trends.
- graph on page 12 showing positive EBIDTA trends on first group of Wash casinos purchased
-graph on p15 showing positive EBIDTA trends of 2nd group of Wash casinos purchased.
- chart on page 15 showing 1 mil annual savings from reduction of 15 redundand positions at 2nd group of Wash casinos purchased
BUt if you use the company's own numbers from when they did the transactions. Bought the Grande for 6.5 million and did 2 million in upgrades. Spent over 700k to add the pit and a money losing coffee stand. So they are into that property at least 9 mil even if no other cap ex. Said hwne they bought it it was doing and would do 2 million EBITDA. The way they operate they will be lucky if it ever does 500k meaning they paid 18 times Ebitda. One reason their book value is irrelevant. Bought WA 1 at 5 times ebitda for 15.75 meaning it was doing 3.15 mil when they bought it. Bought WA 2 for 3 times for 11 mil meaning it was doing 3.666. So 2 plus 3.15 + 3.666 is over 8.8 million. Anything under that means they haven't added value since they have taken over those properties.
They will have a profit this quarter based on the tax refund. Operationaly I would expect a loss. They will blame the weather or low hold or something but the truth is they are not good operators. The Grande used to have EBITDA of 500k even in the slow quarters. Now if it is 0 they will be lucky. We will have to see how profitable their cardrooms are.
I think they will be at or very close to an operational profit this quarter. See the 1/12 investor presentation on their web site. Unless this slideshow is very misleading somehow, it looks like they are making major operational improvements such as cutting redundant admin positions from acquired casinos. Sturgis has alot of credibility IMO.