Isle of Capri Casinos - Aggressive Growth
April 19 2012 - 8:00PM
Zacks
Isle of Capri Casinos (ISLE) is a Zacks #2 Rank (Buy) after
seeing earnings estimates move meaningfully higher.
Company Description
Isle of Capri Casinos, Inc., together with its subsidiaries,
develops, owns, and operates gaming facilities and lodging and
entertainment facilities in the United States. It owns and operates
14 casino gaming facilities. The company was founded in 1990 and is
based in St Louis, Missouri.
Isle of Capri Casinos Tops Expectations in the Most Recent
Quarter
Isle of Capri Casinos beat the Zacks Consensus Estimate in the
most recent quarter. In losing three cents, the company beat the
Zacks Consensus Estimate of a loss of ten cents. That translates to
a 70% beat. The company also outperformed on the top line as well,
reporting revenues of $242 million, $8 million more than the Zacks
Consensus Estimate. The stock, however, moved lower by 1.6%
following the report.
In the last year, Isle of Capri Casinos reported positive
earnings only one time. The April 2011 quarter saw revenue of $274
million and earnings per share of $0.22. The Zacks Consensus
Estimate was calling for $0.23 so it was a $0.01 miss or 4.4% lower
than expected. The stock moved higher the following day by
2.6%.
Isle of Capri Casinos Melted In July 2011
Following the solid report in April of 2011, analysts were
expecting the company to remain profitable in calling for $0.07 per
share in earnings. The company posted a loss of $0.06, or a $0.13
miss which translates to a 185% negative surprise. The stock traded
lower by 2.5% following the report.
Estimates have moved higher
Isle of Capri Casinos has seen its earnings estimates move
higher over the last few months. The Zacks Consensus Estimate in
January 2012 was $0.07 and has since doubled to $0.14. That
significant move has been reflected in the stock price. Since the
start of the year ISLE has moved higher by more than 38%.
Valuations
Isle of Capri Casinos has a valuation which might bring out the
gambler in aggressive growth investors. With a 73x trailing PE
multiple, it is trading roughly three times higher than the
industry average of 23x. The forward PE of 46x is double the
industry average of 23x, but these multiples can be traced back to
the recent lack of positive earnings. The price to book is more of
a safe bet for Isle of Capri Casinos, trading at 0.8x or just about
half the industry average of 1.5x. Price to sales of .24x is also
significantly lower than the 1.5x industry average.
The Chart
A quick look at chart shows how increased earnings estimates can
move a stock. As noted above, when estimates increase in a
meaningful way, the stock tends to move higher. This is the case
for Isle of Capri Casinos which has seen a 38% move since the start
of the year. The recent pull back from the mid seven level gives
aggressive growth investors an attractive entry point for this
gaming stock. Isle of Capri Casinos is a Zacks #2 Rank (Buy).
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