MCRI - Monarch Casino & Resort: Stable Profitability With Acceptable Margins

2024-04-02 03:58:51 ET

Summary

• Monarch Casino & Resort provides gaming, hotel, and hospitality services in the USA through its Atlantis Casino Resort Spa and Black Hawk Resort Spa.
• Atlantis Casino Resort Spa has the highest payout rates in Northern Nevada, ensuring robust demand.
• Monarch has expansion plans for its Nevada unit and aims to target the thriving market in the Denver metropolitan area.

My thesis

Monarch Casino & Resort (MCRI) was formally established as a registered legal entity in the state of Nevada in 1993. The core of its business is providing gaming, hotel and hospitality services in the USA.

To provide these services, the company owns and operates the Atlantis Casino Resort Spa in Reno, Nevada and the Black Hawk Resort Spa in Black Hawk, Colorado.

In addition to its core business, Monarch has companies related to the licensing requirements for operating alcoholic beverages in Black Hawk, these are Monarch Promotional Association Inc. and Chicago Dogs Eatery , Inc. To support its operations in Colorado the company has land, which the company uses as an industrial warehouse.

My purchase thesis for Monarch is based both on the company's capital structure, which presents a conservative and underleveraged perspective, and on its operationality, which is resiliently positive despite the pandemic period.

In relation to qualitative paradigms, we also see some catalysts that will boost demand for both the gaming sector and accommodations, such as the Denver thesis, Atlantis' connection with the Reno-Sparks convention center and the stability of the RTP ratio at healthy levels....

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