Ben Graham was likely the first to write about this investment thought.
Did Full
House Resorts (FLL) reach a bargain price, down 50% YTD? Underpeforming its Resort and Casino industry by 102.40% in 2013, last traded at 1.27 a fraction of its 4.07 book value. In addition, Full House sits at 10
year lows for valuations using P/B , P/S. Current share price is at 5 year low.
Does (FLL)Full House Resorts' price drop reconcile with financial statement changes? Book value annual growth rates were 16.30% and 19.50% for the prior 10 and 5 year periods respectively.
Full
House Resorts (FLL)a casino gaming company owns, invests and provides management consulting
services for other casinos. Native American and commercial clients rely on FLL’s
management expertise and industry knowledge.
Additional
revenue generating activities also include full resort accommodations. Hotel/rooms, spas, pools, meeting spaces, food outlets, theater for concerts, golf course, clubhouses, high end restaurants, and other related services are available at owned or managed properties.
Does (FLL)Full House Resorts' price drop reconcile with financial statement changes? Book value annual growth rates were 16.30% and 19.50% for the prior 10 and 5 year periods respectively.
FLL trades at a large discount to historical and industry averages for the following measures.Analysis
of 61 Resort and Casino peers concluded FLL has the following mean reverting attributes.
Largest percentage
drop from 52 week high, top 3 rank based percentage off historical high for P/B,industry's lowest P/B and P/S , 2nd lowest price to tangible book value, lowest 5 year,3 year and 52 week stock returns.
Table below has useful historical financial results. It helps to quantify the size of valuation drop. Tangible assets were acquired with the
related improvement in revenue.
However, price valuation was more than cut in half from 2010 and as recent as
2013 for P/TB.
Additional data below highlights the 2013 drop in Z score .
Positive EBITDA and EBIT from 2008 shown in the table below. Large growing book and revenue per share with large stock price drop.
Note the large annual increase in gross profit and revenue per share coupled with the slight reduction in share count from 2008.
The table below shows large per share increase in
assets (improvement and acquisition of operating assets) funded by retained
earnings and debt. Financial results were impacted by recent historically harsh
weather, negative regional gaming trends and increase competition in their
Ohio/Indiana market. But, management commented during results reported May
2014. Current headwinds, tough operating environment will pass. Therefore,
investment in existing and new casino assets is positioned to create large
unexpected upside results. Obvious historic and industry low valuation
indicates the market has no expectations for any positive news. This extreme
low expectation may be creating an investment opportunity.
Industry exception , FLL is reporting small positive insider activity. Insider ownership is 20.25%.
FLL is a risky investment.But may have significant upside from
these prices.
Investors may be over looking positive changes such as.
Substantial tax relief from the Rising Star facility, the
amount is around $2.5 million per year starting in July 2014.
Aggressive cost containment at the reduced volume facilities. the reduced
cost structure was $4.2 million over the same quarter a year ago. The expense
savings will continue to accelerate.
New hotel tower at Rising Star in the North Star Tower is outperforming
with weekend occupancies in a 90%-plus range
Management estimated weather accounted for approximately $1.4
million of the reduction EBITDA during the quarter.
Investment opportunities, Kentucky provides great future growth
potential.
Full House transformed from a management company into a regional
operator of diversified quality assets.
Full House is comprised of long-tenured professionals in the
gaming industry, with significant experience. This positions the company to
leverage recent investments.
Construction on 142-room hotel tower at the Silver Slipper is expected for delivery in the first quarter of this year, or possibly early in the first quarter of next year.
To summarize data as of Friday 06/29/14.
Price = $1.27
Market Cap: 23.96M , Enterprise Value: 76.43M
Price/Sales: 0.18 ,Price/Book: 0.31
Enterprise Value/Revenue:
0.56 , Enterprise Value/EBITDA:
5.71
Gross Profit: 63.39M
, EBITDA: 13.39M
Total Cash: 14.52M ,Total Cash Per Share: 0.77
Current Ratio: 2.10
, Book Value Per Share: 4.07
Operating Cash Flow (ttm):
8.79M , Levered Free Cash Flow (ttm): 1.25M
52-Week Change: -52.61%
52-Week High (Jul 31, 2013): 3.05 , 52-Week Low (Jun 27, 2014): 1.18
% Held by Insiders:
20.25% , % Held by Institutions:
37.70%
Short % of Float: 0.30%
Long FLL
