Real Estate Sales in 2025 Predicted to Boost Golden Entertainment's Stock Value, According to Expert Analysis
Golden Entertainment, a prominent name in the casino industry, is gearing up for a significant year in 2025, according to Deutsche Bank analyst Carlo Santarelli. The stabilization of the STRAT, a key property in Golden Entertainment's portfolio, is seen as a crucial factor in this anticipated growth.
As of the current stock market, Golden Entertainment's stock is trading just above $30. Deutsche Bank has set a price target of $36 for the company's stock, a figure that could potentially be reached if the company manages to execute a strategic structural change in 2025. This transformation, driven by the company's executive management or board of directors, would be based on market and investor inputs.
However, no specific leadership changes or direct plans related to Golden Entertainment were found in the search results. The strategic decision could potentially involve a capital-return strategy, which involves buying back shares. This strategy, while it hasn't proven fruitful for peers, could potentially be unique for Golden Entertainment, thanks to the smaller float and strategic alternative perceptions of the company.
Santarelli believes the capital-return story could drive a significant factor for Golden Entertainment's stock. In the current outlook, Golden Entertainment's capital spend is limited, and the buyback agenda is expected to continue and likely accelerate into 2025. Santarelli expects Golden Entertainment to buy back roughly 9% of the market cap in 2024.
A potential sale of Golden Entertainment's real estate could drive up to a 20% stock price increase, according to Santarelli. The $36 price target is based on Deutsche Bank's consistent use of historical market multiples and asset sales to 2025 property-level cash flow. If a real estate transaction does not occur, Santarelli predicts something significant will happen in 2025 regarding Golden Entertainment's operations.
The Nevada casino segment is expected to experience a double-digit decline in EBITDA in 2024. Despite this, the Super Bowl is expected to serve as a modest headwind for Golden Entertainment in the first quarter of 2025, with a predicted $1 million impact on Las Vegas.
The SOTP approach used to determine the $36 price target applies segment-level multiples to Golden Entertainment's operations. The $36 price target is based on a SOTP approach using segment-level multiples and asset sales to 2025 property-level cash flow. The $36 price target implies an equity valuation of $40 for Golden Entertainment's stock, according to Deutsche Bank's base case math.
Golden Entertainment targets net leverage of below three times. Santarelli estimates that Golden could hypothetically return $140 million to shareholders (14% of the current market cap) through repurchases and remain within the sub three times net leverage framework.
Deutsche Bank issued a Buy rating for Golden Entertainment's stock in 2025, indicating a positive outlook for the company's future. With strategic changes on the horizon and a potential capital-return strategy, investors may want to keep a close eye on Golden Entertainment in the coming years.
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