GDEN - Golden Entertainment rallies to 2023 high after asset sale

2023-03-06 12:17:30 ET

Shares of Golden Entertainment ( NASDAQ: GDEN ) broke 6.80% higher in mid-day trading on Monday after the casino operator announced the sale of its third-party Distributed Gaming operations in Nevada and Montana to J&J Ventures for $322.5M.

CBRE Equity Research reiterated a Buy rating on GDEN following the announcement.

Analyst John DeCree said the asset sale came at a significant premium to the company’s current long-term trading multiple of 7.3X. Crucially, he said investors generally consider the third-party Distributed Gaming segment as GDEN's lowest multiple business. That could indicate GDEN's forward multiple will re-rate materially higher, anchored by what DeCree said is low net leverage and wholly-owned casino real estate in attractive jurisdictions like the Las Vegas Strip and Las Vegas Locals market.

Jefferies was also positive on the implication of the Golden Entertainment ( GDEN ) deal.

"Going forward post the deal, GDEN will be at ~1x leverage, broadening the opportunity set of growth options to larger-scale M&A and compelling Mgt to become more active on the buy side," noted analyst David Katz.

Golden Entertainment ( GDEN ) broke to its 2023 high following the asset sale and bounced back over its 100-day and 200-day moving averages.

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