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Accel Entertainment’s 4Q Revenues Plunge 39%, Miss Estimates

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Shares of Accel Entertainment closed around 1% lower on Monday after the distributed gaming operator reported worse-than-expected 4Q results.

Accel Entertainment’s (ACEL) 4Q revenues plunged 39.4% to $74.4 million and missed the Street’s estimates of $80.8 million. The year-over-year decline in the top-line reflects the negative impact from the COVID-19 pandemic.

Accel reported an adjusted net loss of $4.1 million for 4Q, compared with an adjusted net income of $1.3 million posted in the year-ago quarter.

Looking ahead, CEO Andy Rubenstein said, "we have begun 2021 with a strong tailwind, achieving the highest revenue month in our history in February. We’re confident we are well-positioned to continue this success as the market recovers and we remain focused on delivering a safe, yet comfortable gaming experience for our players."

For 2021, the company forecasts revenues of between $580 million and $600 million, which is higher than the consensus estimate of $545.7 million. It anticipates adjusted EBITDA to be in the range of $95-$100 million. (See Accel Entertainment stock analysis on TipRanks)

Earlier this month, Accel announced the acquisition of Century Gaming, Inc. in a cash and stock transaction worth $140 million. The deal is likely to enhance its presence in the Montana and Nevada gaming markets.

On March 3, Northland Securities Greg Gibas reiterated his Buy rating and price target of $15 (24% upside potential) on the stock.

In a note to investors, Gibas wrote, “We like that this acquisition will expand and geographically diversify ACEL's distributed gaming footprint in the US, with ~71% of pro forma revenue in 2021 expected to be generated in Illinois, ~28% in Montana & Nevada, and ~1% in Pennsylvania & Georgia, notably reducing ACEL's single jurisdiction risk.” The analyst also noted that the buyout “will bring new technology to ACEL's portfolio as well.”

Overall, consensus among analysts is a Moderate Buy based on 2 Buys and 2 Holds. The average analyst price target of $14.13 implies upside potential of about 16.8% to current levels. Shares have surged more than 39% over the past year.

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