Golden Entertainment Inc (GDEN, Financial) has seen a daily gain of 13.71%, offset by a 3-month loss of -9.52%. With an Earnings Per Share (EPS) of 1.58, the question arises: Is the stock modestly undervalued? This article provides a comprehensive analysis of Golden Entertainment's current valuation and encourages readers to delve into the detailed assessment that follows.
A Snapshot of Golden Entertainment Inc (GDEN, Financial)
Golden Entertainment is a US-based company with a focus on distributed gaming, casino, and resort operations. The company's revenue primarily comes from its Nevada Casino Resorts and Distributed Gaming segments. With a current stock price of $36.09 and a GF Value of $42.34, Golden Entertainment appears to be modestly undervalued.
Understanding the GF Value of Golden Entertainment (GDEN, Financial)
The GF Value is an exclusive GuruFocus valuation method that estimates a stock's intrinsic value based on historical trading multiples, an adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line represents the fair trading value of the stock.
Golden Entertainment's stock seems to be modestly undervalued according to the GF Value. If the stock price is significantly above the GF Value Line, it indicates overvaluation and potentially poor future returns. Conversely, if the stock price is significantly below the GF Value Line, the stock may be undervalued and could offer higher future returns. Given Golden Entertainment's current price of $36.09 per share, the stock appears to be modestly undervalued.
Because Golden Entertainment is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
Golden Entertainment's Financial Strength
Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy its stock. Golden Entertainment's cash-to-debt ratio of 0.12 is worse than 76.83% of 820 companies in the Travel & Leisure industry, indicating its financial strength is poor.
Profitability and Growth of Golden Entertainment
Investing in profitable companies carries less risk. Golden Entertainment has been profitable for 6 years over the past 10 years, with revenues of $1.10 billion and an Earnings Per Share (EPS) of $1.58 in the past 12 months. Its operating margin of 12.37% is better than 64.31% of 821 companies in the Travel & Leisure industry.
Growth is a crucial factor in a company's valuation. Golden Entertainment's 3-year average revenue growth rate is better than 55.02% of 767 companies in the Travel & Leisure industry, and its 3-year average EBITDA growth rate is 13.3%, ranking better than 62.56% of 609 companies in the industry.
ROIC vs. WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. Golden Entertainment's ROIC was 7.61, while its WACC was 9.53 over the past 12 months.
Conclusion
In summary, Golden Entertainment's stock appears to be modestly undervalued. The company's financial condition is poor, and its profitability is fair. Its growth ranks better than 62.56% of 609 companies in the Travel & Leisure industry. For more information about Golden Entertainment stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
