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Full House Resorts Inc. Message Board

  • black_swanm black_swanm Mar 12, 2013 6:58 PM Flag

    Jtyler didn't go far enough with Sales

    I found that very interesting that somebody brings the PSR or price to sales valuation technique to casino stocks. I do see from alot of your posts that you value casino's by cash flow as I have always understood this but this is not sufficient to fully value any company regardless of the sacred cows of how you value something. It is hard to find too many direct competitors to compare FLL with. And Jtyler nor Cnoinvestor or anybody else seems to have cared much to compare Full House to it's direct competition. Partially because other firms have property management contracts as their business model and only 1% of Full House' revenue comes from property management anymore. The other issue is that it is hard to find casinos in this space that report a profit that are this small in size. One that we all know of is Century Casino or CNTY which does report profits and does have a similar market cap and business model. Let's compare.

    Century has a Price to sales ratio of 1:1 while Full House has a Price to Sales ratio of 0.49. This is incredible considering FLL has about $128 million in sales and CNTY has sales of $70 million. Basically CNTY has 54% of the revenue that Full House does, but is more valuable according to the markets and has a higher market cap.

    There are other factors to consider like CNTY has no debt and FLL does. I don't think anybody expects FLL to not be able to repay that though. Also, Rising Star has an issue with competition, but the new hotel will stop the bleeding and with the Silver Slipper adding what $50 million in revenue a year? Sales will still grow. So really I don't see why FLL shouldn't be trading at a 1:1 ratio with it's sales like CNTY.

    Thank god the markets are not efficient. Any feedback please?

    Disclosure - I have been buying shares on the way down from the last earnings report. I think this is an intriguing story.

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