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Category: Stock Market and Gaming and Leisure
Date: 1 November 2019 Stock Price: $40.36 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Gaming and Leisure Properties, a company that owns gaming related facilities and and leases them out to gaming operators.
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About Gaming and Leisure Properties
Gaming and Leisure Properties, Inc. (“GLP”) is a self-administered and self-managed Pennsylvania real estate investment trust engaged in acquiring, financing, and owning real property to be leased to gaming operators in "triple net" lease arrangements. GLP’s portfolio consists of 44 gaming and related facilities, which are geographically diversified across 16 states. GLP intends to grow its portfolio by aggressively pursuing opportunities to acquire additional gaming facilities to lease to gaming operators. GLP also intends to diversify its portfolio over time by acquiring properties outside the gaming industry.
Financial overview of Gaming and Leisure Properties 3rd quarter 2019 earnings results
The data below refers to the latest quarter's data (unless specified otherwise)
- Total revenues: $287.612 million (up from $254.139 million for the same quarter of the previous year)
- Total revenues increased by 13.17% over the last 12 months
- Operating expenses: $99.987 million (up from $89.305 million for the same quarter of the previous year)
- Operating expenses increased by 11.96% over the last 12 months
- Net income: $90.546 million (down from $104.815 million for the same quarter of the previous year)
- Diluted earnings per share: $0.42 (up from $0.49 for the same quarter of the previous year)
- PE ratio of Gaming and Leisure Properties: 24
- Dividend declared: $0.68
- Dividend yield of Gaming and Leisure Properties: 6.7%
- Dividend yield of Gaming and Leisure Properties: 6.7%
- Number of shares in issue: 215.6 million (up from 213.9 million for the same period of the previous year)
- Cash and cash equivalents: $25.566 million
- Cash and cash equivalents per share: $0.12
- Cash and cash equivalents makes up 0.27% of Gaming and Leisure Properties' market capital
- Cash and cash equivalents makes up 0.30% of Gaming and Leisure Properties' total assets
- Total stockholders equity in Gaming and Leisure Properties: $2.106 billion
- Stockholders equity per share in Gaming and Leisure Properties: $9.84
- Gaming and Leisure Properties is trading at 4.1 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at
Gaming and Leisure (NASDAQ: GLPI) management commentary on 3rd quarter 2019 earnings
WYOMISSING, Pa., Oct. 31, 2019 (GLOBE NEWSWIRE) -- Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) (“GLPI” or the “Company”), North America's first gaming-focused real estate investment trust (“REIT”), today announced results for the quarter ended September 30, 2019. On a year-over-year basis, third quarter total revenue grew 13.2%, income from operations grew 13.8%, net income decreased 13.6%, Adjusted EBITDA increased 17.2% and funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) rose 12.6% and 13.6%, respectively. The year-over-year financial growth primarily reflects GLPI’s October 2018 acquisitions of real property assets operated by Boyd Gaming Corporation (“BYD”), Eldorado Resorts, Inc. (“ERI”) and Penn National Gaming, Inc. (“PENN”). The year-over-year decrease in net income was primarily attributable to the non-recurring losses on debt extinguishment of $21.0 million in connection with our cash tender offer to purchase our 4.875% senior unsecured notes due 2020 during the 2019 third quarter, partially offset by the acquisitions.
Chief Executive Officer, Peter M. Carlino, commented “GLPI delivered another quarter of solid financial results reflecting our initiatives and strategies to drive cash flow growth from accretive transactions while actively managing our capital structure and cost of capital. Our diversified portfolio of regional gaming assets, managed by the industry’s leading operators, continues to generate one of the most stable cash flow streams in the triple-net REIT sector. During the third quarter, we further strengthened our balance sheet through an opportunistic refinancing that reduced our borrowing costs and extended our average debt maturities. Our talented team remains focused on identifying and pursuing portfolio enhancing accretive transactions to position GLPI to extend its long-term record of dividend growth and value creation for shareholders.”
During the 2019 third quarter, shareholders received a quarterly cash dividend of $0.68 per share, marking a 7.9% increase over the comparable period in 2018. GLPI's current $2.72 annualized dividend represents 5.0% compound annual growth since the Company's formation. The annual cash dividend represents a yield of 6.7% based on the $40.36 per share closing price of the Company's stock on October 31, 2019
Chief Executive Officer, Peter M. Carlino, commented “GLPI delivered another quarter of solid financial results reflecting our initiatives and strategies to drive cash flow growth from accretive transactions while actively managing our capital structure and cost of capital. Our diversified portfolio of regional gaming assets, managed by the industry’s leading operators, continues to generate one of the most stable cash flow streams in the triple-net REIT sector. During the third quarter, we further strengthened our balance sheet through an opportunistic refinancing that reduced our borrowing costs and extended our average debt maturities. Our talented team remains focused on identifying and pursuing portfolio enhancing accretive transactions to position GLPI to extend its long-term record of dividend growth and value creation for shareholders.”
During the 2019 third quarter, shareholders received a quarterly cash dividend of $0.68 per share, marking a 7.9% increase over the comparable period in 2018. GLPI's current $2.72 annualized dividend represents 5.0% compound annual growth since the Company's formation. The annual cash dividend represents a yield of 6.7% based on the $40.36 per share closing price of the Company's stock on October 31, 2019
Portfolio Update
GLPI's primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. As of September 30, 2019, GLPI's portfolio consisted of interests in 46 gaming and related facilities, including Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the "TRS Properties", the real property associated with 33 gaming and related facilities operated by PENN, the real property associated with 6 gaming and related facilities operated by ERI (including one mortgaged facility), the real property associated with 4 gaming and related facilities operated by BYD (including one mortgaged facility) and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilities are geographically diversified across 16 states and contain approximately 23.5 million square feet.
Guidance
The basic share count is approximately 214.7 million shares for the year and the fourth quarter and the fully diluted share count is approximately 215.4 million shares for the year and 215.3 million shares for the fourth quarter. The image below shows the fiscal guidance for the full fiscal 2019 for Gaming and Leisure Properties.
GLPI's primary business consists of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. As of September 30, 2019, GLPI's portfolio consisted of interests in 46 gaming and related facilities, including Hollywood Casino Baton Rouge and Hollywood Casino Perryville, which are referred to as the "TRS Properties", the real property associated with 33 gaming and related facilities operated by PENN, the real property associated with 6 gaming and related facilities operated by ERI (including one mortgaged facility), the real property associated with 4 gaming and related facilities operated by BYD (including one mortgaged facility) and the real property associated with the Casino Queen in East St. Louis, Illinois. These facilities are geographically diversified across 16 states and contain approximately 23.5 million square feet.
Guidance
The basic share count is approximately 214.7 million shares for the year and the fourth quarter and the fully diluted share count is approximately 215.4 million shares for the year and 215.3 million shares for the fourth quarter. The image below shows the fiscal guidance for the full fiscal 2019 for Gaming and Leisure Properties.
Gaming and Leisure Properties (NASDAQ: GLPI) stock price history
The image below obtained from Google, shows the stock price history of Gaming and Leisure Properties over the last 5 years. And its been a very volatile but pretty good time for Gaming and Leisure Properties. 5 years ago the stock of Gaming and Leisure Properties was trading at around $32 a stock and its currently trading at $40.36 a stock. That's a decent return of 26.2% provided by Gaming and Leisure Properties stockholders over the last 5 years.
The stock of Gaming and Leisure Properties is trading at a lot closer to its 52 week high of $40.82 than it is to its 52 week low of $31.19 a stock, which to us is a clear indication that the short term sentiment and momentum of Gaming and Leisure Properties stock is very positive at this point in time,
The stock of Gaming and Leisure Properties is trading at a lot closer to its 52 week high of $40.82 than it is to its 52 week low of $31.19 a stock, which to us is a clear indication that the short term sentiment and momentum of Gaming and Leisure Properties stock is very positive at this point in time,
Recent coverage of Gaming and Leisure Properties
The extract below discusses the latest regarding Gaming and Leisure Properties (NASDAQ: GLPI) as obtained from Zacks.com
Gaming and Leisure Properties (GLPI - Free Report) came out with quarterly funds from operations (FFO) of $0.87 per share, beating the Zacks Consensus Estimate of $0.85 per share. This compares to FFO of $0.76 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 2.35%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.85 per share when it actually produced FFO of $0.86, delivering a surprise of 1.18%. Over the last four quarters, the company has surpassed consensus FFO estimates two times.
Gaming and Leisure Properties, which belongs to the Zacks REIT and Equity Trust - Other industry, posted revenues of $287.61 million for the quarter ended September 2019, missing the Zacks Consensus Estimate by 0.18%. This compares to year-ago revenues of $254.14 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future FFO expectations will mostly depend on management's commentary on the earnings call. Gaming and Leisure Properties shares have added about 24% since the beginning of the year versus the S&P 500's gain of 21.5%.
Read the full article here
Gaming and Leisure Properties (GLPI - Free Report) came out with quarterly funds from operations (FFO) of $0.87 per share, beating the Zacks Consensus Estimate of $0.85 per share. This compares to FFO of $0.76 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 2.35%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.85 per share when it actually produced FFO of $0.86, delivering a surprise of 1.18%. Over the last four quarters, the company has surpassed consensus FFO estimates two times.
Gaming and Leisure Properties, which belongs to the Zacks REIT and Equity Trust - Other industry, posted revenues of $287.61 million for the quarter ended September 2019, missing the Zacks Consensus Estimate by 0.18%. This compares to year-ago revenues of $254.14 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future FFO expectations will mostly depend on management's commentary on the earnings call. Gaming and Leisure Properties shares have added about 24% since the beginning of the year versus the S&P 500's gain of 21.5%.
Read the full article here
Gaming and Leisure Properties (NASDAQ: GLPI) stock valuation
So what do we value Gaming and Leisure Properties' stock at after the release of their 3rd quarter 2019 earnings and the fiscal guidance provided for the full fiscal 2019? Based on Gaming and Leisure Properties earnings report and fiscal guidance provided our valuation models provides a target (full value) price of Gaming and Leisure Properties at $31.90 a stock. We therefore believe that the stock of Gaming and Leisure Properties' is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $31.90 therefore we believe a good entry point into Gaming and Leisure properties stock is at $28.70 or below. We expect the stock of Gaming and Leisure Properties to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time. We therefore rate Gaming and Leisure Properties as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $31.90 therefore we believe a good entry point into Gaming and Leisure properties stock is at $28.70 or below. We expect the stock of Gaming and Leisure Properties to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time. We therefore rate Gaming and Leisure Properties as a sell
Next earnings release of Gaming and Leisure Properties
It is expected that Gaming and Leisure Properties will publish their 4th quarter and full fiscal 2019 earnings report in early February 2020