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Category: Stock Market and Twin River Worldwide
Date: 15 November 2019 Stock Price: $24.28 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Twin River Worldwide, the owner of operator of 4 casino's across various states in the United States.
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About Twin River Worldwide
Twin River Worldwide Holdings, Inc. owns and manages four casinos, two casinos in Rhode Island, one in Mississippi, and one in Delaware, as well as a Colorado horse race track that has 13 authorized OTB licenses. Properties include Twin River Casino Hotel (Lincoln, RI), Tiverton Casino Hotel (Tiverton, RI), Hard Rock Hotel & Casino (Biloxi, MS), Dover Downs Hotel & Casino (Dover, DE) and Arapahoe Park racetrack (Aurora, CO). Its casinos range in size from 1,000 slots and 32 table games facilities to properties with over 4,100 slots, approximately 125 table games, and 48 stadium gaming positions, along with hotel and resort amenities. Its shares are traded on the New York Stock Exchange under the ticker symbol “TRWH.”
Overview of Twin River's 3rd quarter 2019 earnings report
The numbers we are interested in (for the quarter):
- Revenue: $129.309 million (up from $110.494 million from the same quarter of the previous year)
- Revenue increased by 17% over the last 12 months
- Operating costs: $107.858 million (up from $80.843 million for the same quarter of the previous year)
- Operating costs increased by 33.4% over the last 12 months
- Net income $6.999 million (down from $17.410million for the same quarter of the previous year)
- Diluted earnings per share: $0.18 (down from $0.45 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 37.925 million (down from 38.575 million for the same quarter of the previous year)
- Cash and cash equivalents: $232.603 million
- Cash and cash equivalents per share: $6.13
- Cash and cash equivalents makes up 25.26% of Twin River's market capital
- Cash and cash equivalents makes up 21.7% of Twin River's total assets
- Accounts receivable: $22,525 million
- Accounts receivable makes up 2.1% of Twin River's total assets
- Stockholders equity of Twin River: $262.725 million
- Stockholders equity per share: $6.92
- Twin River is trading at 3.5 times its stockholders equity which is within the expected range of between 2 and 4 which most companies tend to trade at.
- Cash generated from operations (for the 9 months): $72.702million
- Cash generated from operations per share (for the 9 months): $1.92
Twin River Worldwide' management commentary on their 3rd quarter 2019 earnings report
Providence, Rhode Island - November 14, 2019 - Twin River Worldwide Holdings, Inc. (NYSE: TRWH) (the “Company”, “Twin River” or “TRWH”) today reported financial results for the third quarter ended September 30, 2019.
“I am very pleased that our proven corporate strategy of accretive growth, continued diversification of our portfolio and a meaningful return of capital to shareholders, continues to generate value for our stakeholders,” said George Papanier, President and Chief Executive Officer. “While we experienced the anticipated short-term impacts of new competition at our Twin River Casino Hotel in the quarter, we continued to reap the benefits of our disciplined M&A strategy, with Dover Downs and Tiverton both performing extremely well this quarter. Our overall plan is ontrack and the long-term value proposition we have laid out for our investors remains intact.”
“I am very pleased that our proven corporate strategy of accretive growth, continued diversification of our portfolio and a meaningful return of capital to shareholders, continues to generate value for our stakeholders,” said George Papanier, President and Chief Executive Officer. “While we experienced the anticipated short-term impacts of new competition at our Twin River Casino Hotel in the quarter, we continued to reap the benefits of our disciplined M&A strategy, with Dover Downs and Tiverton both performing extremely well this quarter. Our overall plan is ontrack and the long-term value proposition we have laid out for our investors remains intact.”
Previously Announced Acquisitions
Black Hawk, Colorado
On January 29, 2019, the Company entered into an agreement to acquire a subsidiary of Affinity Gaming that owns three casino properties located in Black Hawk, Colorado: Golden Gates, Golden Gulch and Mardi Gras. Pending regulatory approval, and the satisfaction of other customary closing conditions, the transaction is expected to close in early 2020. On November 5, 2019, Proposition DD was passed by the voters of Colorado, legalizing sports gambling in the state. As a result of this new legislation, when the expected acquisition of the three facilities in Colorado closes, which the Company expects will occur in early 2020, the Company will acquire the right to three sports gaming licenses in Colorado.
Isle of Capri Kansas City and Lady Luck Vicksburg
On July 10, 2019, the Company entered into a definitive agreement to acquire the operations and real estate of Isle of Capri Kansas City and Lady Luck Vicksburg from Eldorado Resorts, Inc. in a cash transaction for $230 million, subject to certain customary post-closing adjustments. The transaction is subject to the satisfaction of certain customary closing conditions, including approval by the gaming regulators in Mississippi (which was received in October 2019) and Missouri, and is expected to close in early to mid 2020.
Black Hawk, Colorado
On January 29, 2019, the Company entered into an agreement to acquire a subsidiary of Affinity Gaming that owns three casino properties located in Black Hawk, Colorado: Golden Gates, Golden Gulch and Mardi Gras. Pending regulatory approval, and the satisfaction of other customary closing conditions, the transaction is expected to close in early 2020. On November 5, 2019, Proposition DD was passed by the voters of Colorado, legalizing sports gambling in the state. As a result of this new legislation, when the expected acquisition of the three facilities in Colorado closes, which the Company expects will occur in early 2020, the Company will acquire the right to three sports gaming licenses in Colorado.
Isle of Capri Kansas City and Lady Luck Vicksburg
On July 10, 2019, the Company entered into a definitive agreement to acquire the operations and real estate of Isle of Capri Kansas City and Lady Luck Vicksburg from Eldorado Resorts, Inc. in a cash transaction for $230 million, subject to certain customary post-closing adjustments. The transaction is subject to the satisfaction of certain customary closing conditions, including approval by the gaming regulators in Mississippi (which was received in October 2019) and Missouri, and is expected to close in early to mid 2020.
Twin River Worldwide (NYSE: TRWH) stock price history
kThe image below, obtained from Google, shows the stock price history of Twin River (NYSE: TRWH) since its listing. And sadly for Twin River investors its not been a great time for the group since they listed. At their time of listing in March 2019 they were trading around $30 a stock, and they are currently trading at $24.28
That is a negative return of -19.1% in 9 months since their listing. And the bad news for Twin River investors is the fact that the company is trading at a lot closer to its 52 week low of $20.35 than it is to its 52 week high of $33.98 which to us is a clear sign that the short term sentiment and momentum of Twin River stock is still overwhelmingly negative.
That is a negative return of -19.1% in 9 months since their listing. And the bad news for Twin River investors is the fact that the company is trading at a lot closer to its 52 week low of $20.35 than it is to its 52 week high of $33.98 which to us is a clear sign that the short term sentiment and momentum of Twin River stock is still overwhelmingly negative.
Recent coverage of Twin River Worldwide
The extract below covers the latest dividend announcement of Twin River Worldwide as obtained from TheStreet.com
Twin River Worldwide Holdings, Inc. (NYSE: TRWH) (the "Company") announced that its Board of Directors has approved a quarterly cash dividend of $0.10 per share on the issued and outstanding common stock. The dividend will be payable on October 25, 2019 to stockholders of record as of the close of business on October 15, 2019. The Company expects the total cost of the dividend to be approximately $3.5 million based on shares outstanding of 34.6 million as of September 30, 2019. For the next quarterly dividend cycle, the Company intends to adopt a more traditional calendar for the consideration, declaration and payment of a quarterly dividend, such as following the Company's quarterly or annual financial reporting
Twin River Worldwide Holdings, Inc. (NYSE: TRWH) (the "Company") announced that its Board of Directors has approved a quarterly cash dividend of $0.10 per share on the issued and outstanding common stock. The dividend will be payable on October 25, 2019 to stockholders of record as of the close of business on October 15, 2019. The Company expects the total cost of the dividend to be approximately $3.5 million based on shares outstanding of 34.6 million as of September 30, 2019. For the next quarterly dividend cycle, the Company intends to adopt a more traditional calendar for the consideration, declaration and payment of a quarterly dividend, such as following the Company's quarterly or annual financial reporting
Twin River Worldwide (NYSE: TRWH) latest stock valuation
So based on the earnings report of Twin River (NYSE: TRWH) what do we value Twin River (TRWH) stock at? Based on the earnings report and the increased competition they mentioned that is affecting one of their casino's our valuation models sets a target (full value) price on Twin River of $22.90 (down slightly from our 2nd quarter 2019 earnings report valuation of Twin River).
We therefore believe Twin River is slightly overvalued. Our valuation models were adjusted to take into account the effect of increased competition and we reduced expected future earnings from the group by 10% in our valuation model to compensate for the additional competition.
We suggest looking to buy Twin River at least 10% below our target (full value) price of $22.90. A good entry point into Twin River stock would therefore be around $20.60 a Twin River stock. We expect the stock of Twin River to decline slightly to levels closer to our target (full value) price in coming weeks and months.
We therefore believe Twin River is slightly overvalued. Our valuation models were adjusted to take into account the effect of increased competition and we reduced expected future earnings from the group by 10% in our valuation model to compensate for the additional competition.
We suggest looking to buy Twin River at least 10% below our target (full value) price of $22.90. A good entry point into Twin River stock would therefore be around $20.60 a Twin River stock. We expect the stock of Twin River to decline slightly to levels closer to our target (full value) price in coming weeks and months.
Next earnings release of Twin River Worldwide
It is expected that Twin River Worldwide will release their 4th quarter and full fiscal 2019 earnings report in middle of February 2020