Today I will take a look at Nevada Gold & Casinos Inc’s (NYSEMKT:UWN) most recent earnings update (30 April 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the hospitality industry performed. As an investor, I find it beneficial to assess UWN’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Did UWN’s recent earnings growth beat the long-term trend and the industry?
UWN recently turned a profit of US$1.3m (most recent trailing twelve-months) compared to its average loss of -US$175.7k over the past five years.
In the last couple of years, Nevada Gold & Casinos expanded its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time.
Scanning growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 29.3% over the past twelve months, and 16.3% over the past five. This growth is a median of profitable companies of 25 Hospitality companies in US including Golden Entertainment, El Pollo Loco Holdings and Shake Shack. This shows that whatever uplift the industry is deriving benefit from, Nevada Gold & Casinos is able to leverage this to its advantage.
In terms of returns from investment, Nevada Gold & Casinos has fallen short of achieving a 20% return on equity (ROE), recording 3.9% instead. Furthermore, its return on assets (ROA) of 3.5% is below the US Hospitality industry of 7.2%, indicating Nevada Gold & Casinos’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Nevada Gold & Casinos’s debt level, has declined over the past 3 years from 7.2% to 5.9%.
What does this mean?
Though Nevada Gold & Casinos’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Nevada Gold & Casinos to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for UWN’s future growth? Take a look at our free research report of analyst consensus for UWN’s outlook.
- Financial Health: Are UWN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 April 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.