Golden Entertainment Graduates to Small-Cap Index

Posted on: February 27, 2022, 06:57h. 

Last updated on: February 28, 2022, 10:04h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Golden Entertainment (NASDAQ:GDEN) is earning a notable equity index promotion, as the stock is heading toward the S&P SmallCap 600 Index.

S&P SmallCap 600
Golden Entertainment’s Strat Las Vegas. The stock is joining the S&P SmallCap 600 Index. (Image: 8NewsNow.com)

Standard & Poor’s (S&P), one of the largest providers of equity benchmarks, made the announcement after the close domestic markets last Friday.

Golden Entertainment Inc. will replace Range Resources in the S&P SmallCap 600 effective prior to the opening of trading on Wednesday, March 2,” according to a statement issued by S&P Global.

Currently, the S&P SmallCap 600 allocates 11.86 percent of its weight to consumer discretionary stocks — the sector in which Golden and other casino operators reside. The benchmark, which is actually home to 675 stocks, holds just one other gaming name — Monarch Casino & Resort (NASDAQ:MCRI).

Why It Matters for Golden

Golden Entertainment’s inclusion in the S&P SmallCap 600 arrives as the stock is higher by almost 118 percent over the past year. That positions it as one of the most beloved small-cap gaming equities on Wall Street and in the investment community.

The move to the widely followed index is also important because it puts Golden shares in front of a wider audience of professional investors. Active managers and passive funds that benchmark to the S&P SmallCap 600 will now be forced to buy the gaming index to move inline with the gauge.

On the passive side alone, that’s a massive amount of capital, as the three largest exchange traded funds (ETFs) tracking the S&P SmallCap 600 have a combined $77 billion in assets under management. Additionally, the index has a penchant for topping its nearest competitor. Currently, Golden resides in 37 ETFs — a number that’s poised to exponentially increase owing to its inclusion in the small-cap index.

“A key difference between the two indices is that the S&P 600, unlike the Russell 2000, employs an earnings screen; companies must have a history of positive earnings before being considered eligible for S&P 600 addition,” according to S&P Dow Jones Indices.

Golden Continues Glittering

News of the stock’s move to the S&P SmallCap 600 Index extends a run of favorable headlines for the casino operator. Earlier this month, Golden said it bought back $10.6 million of its stock in the fourth quarter, and that it’s earmarking $200 million for buybacks this year.

Analysts are fawning over the stock due to factors including vibrancy in the Las Vegas locals market — a key constituency for Golden — and the operator’s robust free cash flow generating capabilities.

Las Vegas-based Golden operates 10 casinos, nine of which are in Southern Nevada, including the Strat.