The recent merger between El Dorado and MTR gaming groups has led to the creation of Eldorado Resorts (ERI)
The new entity has trailing annual revenue of approximately $720 million and adjusted EBITDA of approximately $122 million. (For full financials check out the company’s investor relations website.)
The quarterly report, scheduled to be released March 16th, will be the first one which combines a full quarter’s worth of operations for the merged entity.
Casino Royal
The combined ERI now has properties in Reno, Nevada (El Dorado casino and 50% of the Silver Legacy); Shreveport, Louisiana (El Dorado Shreveport); Columbus, Ohio (Scioto Downs Racino); Chester, West Virginia (Mountaineer Casino Racetrack and Resort); and Erie, Pennsylvania (Presque Isle Downs and Casino).
It is a diversified regional gaming operation with a combined total 3,300 hotel rooms, 280 table games, 30 restaurants, and 10,000 slot machines and video lottery terminals.
Locals and those who can reasonable drive to a resort for an extended weekend getaway are its primary customers.
In this respect it differs from the large Las Vegas and Macau destination gaming resorts such as MGM (MGM), Caesars (CZR) and Las Vegas Sands (LVS) that can draw customers from all over the world.
Regionals Shine
The stocks of regional gaming companies such as Isle of Capri (ISLE), Boyd Gaming (BYD) and Penn National Gaming (PENN) are performing well. El Dorado (ERI) was also up but to a much smaller extent than these better known rivals.
Regionals have seen a steady increase in traffic over the last 6 months, thanks to lower gas prices and an improved jobs market.
A good example of this trend is Nevada. Overall, casinos in Nevada saw a 7.75% increase in revenue to $953 million during January according to the Gaming Control Board.
ERI may be one of the more attractively valued gaming operations, according to my research.
Potential synergies from its recent merger include: reduced overhead expense, increased purchasing power, and cross marketing for customer retention.
Photo Credit: Images Money via Flickr Creative Commons
The investments discussed are held in client accounts as of March 11, 2015. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.
