Monarch Casino & Resort, Inc. (MCRI), a casino operator based in Reno, Nevada, unveiled its fiscal fourth-quarter and full-year earnings on February 11, 2025, comfortably above the consensus revenue and EPS estimates. In this piece, we look into the company’s fundamentals to see whether the odds are stacking up in its favor for investors.
In the fourth quarter ended December 31, 2024, MRCI reported a 4.9% year-over-year increase in net revenues, reaching $134.51 million, which was below Wall Street’s expectation of $128.63 million. The casino and hotel revenue increased 6% and 8.3% year-over-year, respectively, while the food and beverage business contributed $32.58 million in revenue.
Its income from operations grew 24.2% from the year-ago value to $31.52 million, and its net income came in at $25.49 million, 40.1% above the $18.20 million reported in the prior year’s quarter. The company reported earnings per share of $1.36, up 46.2% year-over-year, exceeding the analysts’ expectations by an impressive 19.4%.
Moreover, its adjusted EBITDA amounted to $47.28 million, reflecting a 9.9% increase from the same period last year. Additionally, MCRI’s cash and cash equivalents increased to $58.76 million as of December 31, 2024, compared to the year-ago value of $43.36 million.
Given the strong financial performance, the management is optimistic about Monarch’s growth trajectory, particularly in its Black Hawk property, which continues to capture market share in Colorado. The company’s focus on high-quality resort experiences and premium service has helped attract and retain mid-to-upper-tier guests, contributing to sustained revenue growth across all segments.
Moreover, MCRI’s strong balance sheet and free cash flow provide a solid foundation for continued investment in property enhancements and dividend payouts. The company is also actively exploring merger and acquisition opportunities, which could further drive long-term value for shareholders.
MCRI’s shares have gained 34.3% over the past year and 15.8% year-to-date to close the last trading session at $91.38.
Now, let’s look at factors that could influence MCRI’s performance in the upcoming months:
Attractive Dividend
On February 11, 2025, the company declared a quarterly dividend of $0.30 per share of its outstanding common stock, which is payable on March 15, 2025, to stockholders of record as of March 1, 2025. MCRI pays a $1.20 per share dividend annually, which translates to a 1.30% yield on the current share price. Its four-year dividend yield is 2.43%, and it has a payout ratio of 24.24%
Favorable Analyst Estimates
The consensus revenue estimate of $122.70 million for the fiscal first quarter (ending March 2025) represents a marginal increase year-over-year. The consensus EPS estimate of $0.99 for the current quarter indicates a 6.4% improvement year-over-year. The company has an impressive surprise history, surpassing the consensus revenue and EPS estimates in three of the trailing four quarters.
For the fiscal year ending December 2024, the company’s EPS is anticipated to grow marginally year-over-year to $4.98, while its revenue is expected to increase 1.8% from the prior year period to $531.84 million.
In addition, Street expects its revenue and EPS for the fiscal year 2026 to grow 2.6% and 3.3% from the same period last year to $546.46 million and $5.14, respectively.
Lower-Than-Industry Valuation
In terms of forward P/E, MCRI is currently trading at 18.50x, 2.4% lower than the industry average of 18.96x. Moreover, the stock’s forward EV/EBIT and EV/EBITDA multiples of 13.52 and 9.03 are 13% and 14.9% lower than the industry averages of 15.53x and 10.61x, respectively.
Outstanding Profitability
In terms of the trailing-12-month gross profit margin, MCRI’s 53.78% is 43.4% higher than the 37.51% industry average. Likewise, its 32.91% trailing-12-month EBITDA margin is 192.1% higher than the industry average of 11.26%. MCRI’s trailing-12-month ROCE of 17.88% is 65.4% higher than the 10.81% industry average.
Furthermore, its trailing 12-month net income and levered FCF margins of 18.01% and 14.68% compare favorably to their respective industry averages of 4.23% and 4.64%.
POWR Ratings Show Promise
MCRI’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. MCRI has an A grade for Quality, which is consistent with its high profitability. Also, the stock’s optimistic analyst estimate justifies its B grade for Sentiment.
MCRI is ranked #6 out of 26 stocks in the A-rated Entertainment - Casinos/Gambling industry. Click here to access MCRI’s Growth, Value, Momentum, and Stability ratings.
Bottom Line
The casino gambling market is poised for steady expansion, with gross gaming revenue projected to rise from $273.32 billion in 2025 to $360.10 billion by 2030, reflecting a CAGR of 5.7%. As the industry continues to grow, MCRI is well-positioned to benefit. Moreover, the results from the fiscal year 2024 results further reinforce its ability to generate consistent value. With robust free cash flow, steady net earnings growth, and a sound balance sheet, the company remains focused on long-term expansion and shareholder returns.
Additionally, the stock exhibits strong profitability and solid financials and offers a lucrative dividend, making it an attractive investment option. Considering these factors, investing in the stock could be a wise choice now.
How Does Monarch Casino & Resort, Inc. (MCRI) Stack Up Against Its Peers?
While MCRI has an overall grade of B, equating to a Buy rating, you may also check out these other A-rated (Strong Buy) stocks within the Entertainment - Casinos/Gambling industry: PlayAGS, Inc. (AGS), MGM China Holdings Limited (MCHVY), and GAN Limited (GAN). To explore more Entertainment - Casinos/Gambling stocks, click here.
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MCRI shares were trading at $91.38 per share on Wednesday afternoon, down $0.71 (-0.77%). Year-to-date, MCRI has gained 15.82%, versus a 4.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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