Gaming Partners International
This fact will leave you scratching your head: Although the 10 largest casino and gaming stocks are up an average of 26% year to date, Gaming Partners International (Nasdaq: GPIC) -- a leader in table game equipment and RFID chips (gambling chips that use radio frequency identification technology to help track bets and prevent counterfeiting) -- is down 50%.
Things started going sour in April when Gaming Partners delayed filing its 10-K and was threatened with several class-action lawsuits and delisting from the Nasdaq. The situation got worse when the company missed expectations substantially in both the fourth quarter of 2006 and the first quarter of 2007. Now it's hit rock-bottom after a disappointing second quarter. The culprit was the delay by the customer of several large orders of RFID chips for Macau. As a result, revenue dropped 37% year over year through the first two quarters, and expected profits turned into a $0.13 per-share loss.
Who's Gonna Be the Big Winner?
Despite these struggles, at 1.1 times revenue, the valuation here is compelling -- especially for a company with nearly $18 million in backlog orders and the potential to see 10% operating margins as more casinos adopt RFID chips. Gaming Partners has the exclusive rights to sell RFID chips to U.S. casinos, and the technology has not been widely adopted here yet. The company should be on the ground floor as adoption accelerates.
Moreover, it's not surprising that the Macau customers were a bit hesitant earlier this year. With the enormous new Venetian Macau casino opening in August, the industry was nervous about excess capacity and increased competition. But Gaming Partners has since delivered 2 million chips to the Venetian Macau and completed a delivery to the new Wynn Resorts expansion. That's significant. After all, when these casinos need more chips, odds are they'll come back to Gaming Partners.
I think your had a mild attack of dyxlexia when you put in your short-sale order on GPIC....
If you want to short a gaming company - short PGIC! They were just told to eat $44 Million Poo-Poo platter with all of the trimmings. ($13M judgement x3 (treble damages) + $5M plaintiff expenses)
Yowch! That's a big bill to pay for a company that hasn't been profitable for quite a while....their financials were sucking wind to start with
PS: FWIW, I personally think that GPIC will run for a few more weeks. After that depends on earnings and guidance...
I am the President of Freedom Mountain Investments - a small (at this point) invesment management company that handles individual accounts. I started the company late last year. I will be retiring from my current position at J&J at the end of year and expanding my client base at FMI.
After a couple of months or so the MF may themselves that a certain stock is one of their recs. But the exact text of the original reco is reserved for paying members.
Again very high volume today 3-4x normal - still think this is more than MF members buying here.
sw - owner of GPIC in individual and managed accounts. (at Freedom Mountain Investments)
Kide, Hopefully this is what we have been waiting for. But will be reserved to see if can hold a few days or if it is just the daytraders getting ahold of this on MF rec. Momentum is momentun however so possibly could be an earnings run in store if management does not F##K UP and delay them.