Shares of Golden Entertainment (NASDAQ: GDEN) saw an increase after executives discussed the potential sale of the casino operator’s real estate assets during a recent conference following the third-quarter earnings report. CEO Blake Sartini mentioned that the company is exploring options to monetize its real estate holdings, considering the discounted multiples at which Golden shares are currently trading compared to its peers. The company is more inclined towards selling assets rather than making acquisitions due to the limited opportunities in the current market environment.
CFO Charles Protell stated that Golden is evaluating the value of its real estate, as the company owns all the properties where its eight casino hotels are located. While no immediate plans for the sale of property assets were disclosed, there has been speculation about the potential for such a move to increase shareholder value.
Analysts have noted that Golden’s transparency regarding its strategic review and its intention to take action if share prices remain low is a positive sign for investors. By potentially adopting an asset-light model and divesting its land assets, the stock could see a conservative valuation increase to around $42 per share, significantly higher than its current trading price of around $32.
The value of The Strat, located near the Las Vegas Strip, is highlighted as a significant asset in Golden’s portfolio that could contribute substantially to the company’s market capitalization in a potential sale. Despite having a Nevada-only presence, analysts believe that Golden should not be undervalued relative to its peers, given the growth potential in the state’s gaming market.
With a focus on growing earnings and demonstrating confidence in the stock, Golden has increased its stock repurchase authorization and indicated a commitment to buying back its shares. Analysts predict a strong EBITDA growth for the company in the coming quarters, supported by its strategic positioning in Nevada and the potential for long-term outperformance in the market.
Overall, the potential sale of real estate assets by Golden Entertainment represents a strategic move to enhance shareholder value, increase cash reserves, and explore new growth opportunities in the gaming industry. The company’s clear communication regarding its intentions and financial strategies provides investors with confidence in the long-term prospects of the business.