Monarch Casino & Resort Inc. delivered a solid fourth-quarter earnings report, showing growth across key financial metrics. Revenue, profits, and cash flow all increased, reflecting the company’s ability to expand despite economic headwinds. But while some analysts saw reason for optimism, others struck a more cautious tone.
Revenue and Profits Climb, But Food & Beverage Takes a Hit
The numbers painted a largely positive picture for Monarch. The casino operator saw revenue climb 4.9% to $134.5 million, while net income jumped an impressive 40.1% to $25.5 million. Operating cash flow also showed strength, rising 9.9% to $47.3 million.
Not every segment delivered gains. Food and beverage revenue slipped 0.7%, with the company pointing to inflation as the culprit. Meanwhile, hotel revenue jumped 8.3%, and gaming revenue expanded by 6%.
“Monarch Black Hawk continues to grow market share and increase revenue across all its business segments,” the company stated. The Colorado resort’s performance was a clear highlight, reinforcing Monarch’s strategic expansion in a competitive market.
Big Spending in Reno and M&A Possibilities
Monarch is also investing heavily in its Reno property, Atlantis Casino Resort Spa. The company is close to wrapping up a $100 million renovation, with 246 hotel rooms left to complete.
Beyond renovations, Monarch is actively evaluating merger-and-acquisition (M&A) opportunities. Management pointed to the company’s strong financial position—$58.8 million in cash and no debt—as a key advantage.
The company also emphasized its ability to reinvest in its properties while maintaining shareholder-friendly policies, such as paying dividends. In fact, Monarch’s latest quarterly dividend of 30 cents per share, paid on Dec. 1, was funded directly from cash flow.
Wall Street Divided on Monarch’s Future
While the numbers were encouraging, analyst opinions weren’t entirely aligned.
Jefferies Equity Research analyst David Katz remained measured in his assessment. He acknowledged Monarch Black Hawk’s market share gains but expressed concern over the “absence of growth catalysts” for the company as a whole. Katz maintained a Hold rating on Monarch shares but did increase his price target from $88 to $90 per share.
On the other hand, Truist Securities analyst Barry Jonas was more bullish. He reaffirmed his Buy rating on Monarch, highlighting not just the Black Hawk gains but also the positive outlook for Reno. Despite the ongoing renovations, Jonas pointed to upbeat management commentary as a sign of strength.
Where Monarch Stands Now
Monarch shares were trading at $85.81 at the time of the report. Investors seem to be weighing the company’s solid financials against concerns about its future growth potential.
A few key takeaways:
- Monarch remains debt-free with significant cash reserves.
- Growth at Black Hawk is a bright spot, but Reno is still in transition.
- Inflation is pressuring non-gaming revenue streams like food and beverage.
- The company is exploring M&A opportunities, though no specifics have been disclosed.
With analysts split on whether Monarch is a buy or a hold, the stock’s next moves will likely depend on how well its Reno renovations translate into higher revenues—and whether the company makes a bold M&A move.
