The third quarter of the year was not a good one for Eldorado Resorts as the casino operator which will soon take over Caesars Entertainment ended up having weaker than expected revenue. It was not all bad for them as the money could start flowing in as rapidly as Eldorado predicted. The company’s stock price remains strong according to reliable Igaming source Calvinayre.
Eldorado gained revenue of $663.18 million during the quarter when it reported its earnings on Wednesday. This was equal to $0.47 per share though lower than the $0.62 wall street had forecast. Analysts said that the company could see turnover of $674.72 million which was more than what was reported.
Eldorado see nothing but green light for their takeover of Caesars in a deal worth around $17.3 billion. The acquisition hinges on a vote which will be performed by shareholders of both companies. It is expected to take place next week. If everything does go well, the deal could potentially be finalized during the first half of next year.
Eldorado are keen to rid themselves of things which they deem to be non-core assets including Cap Giradeau, Caruthersville as well as Mountaineer which are set to all go for around $385 million. IOC Kansas CIty and Lady Luck Vicksburg are set to go for around $230 million. Caesars are getting rid of the Rio Las Vegas for around $510 million. Between the sale of all of them, they will not have to borrow as much money in order to consummate the merger. Additional value may be garnered if Caesar’s manage to successfully separate their online casino as well as sportsbook operations which was suggested by Eldorado CEO Tom Reeg.
If one puts together all the prices, they can gather that Eldorado will have more positive free cash flow which will be good news to investors. On Wednesday afternoon, the company was trading for $46.88 after starting to see a rally which continued up until the markets closed the following day. During 3:30 on Sunday, the price rose to $50.40 which was just short of its $53.27 high recorded back in June.
Despite a revenue slip during the quarter, Eldorado remains strong especially in comparison to the competition which they face. John DeCree of Union Gaming stated “While the market was largely expecting an in line quarter, the return to high-single-digit same-store EBITDAR [earnings before interest, taxes, depreciations, amortization and rent/restructuring costs] growth is at least 2x the rate of which most of [Eldorado’s] peers have been growing.”
Decree expects that Eldorado and the merger will yield positive results. Due to the economic recession which is taking place across the World, many companies today have to merge in order to sustain themselves and survive going forward.