It would be perhaps just a little too facile to count out casino stocks. After all, inflation is still massive and economic uncertainty plagues the very landscape. Golden Entertainment (NASDAQ:GDEN), however, proves there’s still life in the field as it spiked to a new 52-week high. Investors are clearly happy with one of its biggest moves, and are investing accordingly.
So what sent Golden Entertainment pushing through the top? A new plan for part of its operations. Golden Entertainment sold off its slot machine interests in both Nevada and Montana to J&J Ventures Gaming. The deal calls for J&J Venture Gaming to pay $213.5 million, plus around $34 million in “purchased cash” for the Nevada operations. The Montana operations, meanwhile, went for significantly less; $109 million plus $5 million in “purchased cash”. Further, this isn’t a one-and-done sort of exercise. J&J Ventures Gaming also agreed to support gaming operations in the Golden tavern locations in business-as-usual fashion.
This is actually great news for Golden; word from CBRE analyst John DeCree pointed out that Golden Entertainment has a long-term trading multiple of 7.3x. Golden sold the slot machine business at around 9x of the Adjusted EBITDA, which is indeed a hefty premium. That could give Golden a real advantage in future trading. It’s a leaner operation, but still has significant real estate holdings in very desirable areas.
As a whole, Wall Street is very pleased with the company. Currently, analyst consensus calls Golden Entertainment a Strong Buy. Further, GDEN stock has an average price target of $51.33, which means it has 19.85% upside potential.
