Does Century Casinos (NASDAQ:CNTY) Deserve A Spot On Your Watchlist?
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Century Casinos (NASDAQ:CNTY). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Century Casinos with the means to add long-term value to shareholders.
View our latest analysis for Century Casinos
Century Casinos' Improving Profits
Over the last three years, Century Casinos has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Century Casinos' EPS soared from US$0.54 to US$0.81, over the last year. That's a impressive gain of 51%.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Our analysis has highlighted that Century Casinos' revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. Century Casinos maintained stable EBIT margins over the last year, all while growing revenue 27% to US$438m. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Century Casinos' future EPS 100% free.
Are Century Casinos Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Century Casinos top brass are certainly in sync, not having sold any shares, over the last year. But the real excitement comes from the US$84k that Chairman & Co-CEO Erwin Haitzmann spent buying shares (at an average price of about US$11.21). It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.
On top of the insider buying, it's good to see that Century Casinos insiders have a valuable investment in the business. As a matter of fact, their holding is valued at US$24m. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 9.5% of the shares on issue for the business, an appreciable amount considering the market cap.
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Erwin Haitzmann, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Century Casinos with market caps between US$100m and US$400m is about US$1.7m.
The Century Casinos CEO received US$1.4m in compensation for the year ending December 2021. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.
Is Century Casinos Worth Keeping An Eye On?
For growth investors, Century Casinos' raw rate of earnings growth is a beacon in the night. Moreover, the management and board of the company hold a significant stake in the company, with one party adding to this total. So it's fair to say that this stock may well deserve a spot on your watchlist. We should say that we've discovered 1 warning sign for Century Casinos that you should be aware of before investing here.
Keen growth investors love to see insider buying. Thankfully, Century Casinos isn't the only one. You can see a a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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