Golden Entertainment Joins Gaming Buyback Boosting Barrage

Posted on: November 7, 2024, 06:00h. 

Last updated on: November 8, 2024, 09:16h.

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

Golden Entertainment (NASDAQ: GDEN), operator of The Strat casino hotel near the Las Vegas Strip, is the latest gaming company to increase the size of its share repurchase program.

Golden Entertainment
Golden Entertainment’s Arizona Charlie’s Casino. The operator increased its buyback plan by $100 million. (Image: Las Vegas Review-Journal)

In conjunction with the release of its third-quarter earnings, Golden said its board of directors approved the addition of $100 million to a previously existing buyback plan, increasing the capacity available for purchases of its shares to $131.4 million.

We anticipate that business conditions will improve in the fourth quarter and, with our increased share buyback authorization currently at over $130 million, we expect to continue to use our liquidity to acquire our own shares throughout the year,” said CEO Blake Sartini in a statement.

Golden, one of the dominant operators of gaming taverns across the Las Vegas Valley, has a penchant for boosting its buyback efforts. The gaming company previously did so in July 2023, also adding $100 million to its stock purchasing capacity.

Golden Making Good on Buyback Pledges

Companies like share repurchase programs because that way of returning capital to shareholders is tax-efficient and offers flexibility. Publicly traded firms that announce buyback plans aren’t legally obligated to repurchase the entirety of the amount announced.

For its part, Golden has made good on prior promises to buy its shares, signaling to investors it sees value in a stock that’s down 22.92% year-to-date.

Golden “repurchased 815,116 shares of common stock in the third quarter, at an average price of $31.65 per share for a total of $25.8 million. In October, after the end of the quarter, an additional 134,613 shares were repurchased for a total of $4.2 million. Year to date, the Company has repurchased 1.94 million shares of the Company’s common stock at an average price of $30.70 per share for a total of $59.5 million,” according to the press release.

The average purchase price of $30.70 executed by Golden this year is slightly below Thursday’s closing print of $30.78.

Golden Balance Sheet in Decent Shape

Helped in part by the fact that the company owns the bulk of the real estate on which its gaming venues reside, Golden’s balance sheet is solid, indicating it’s capable of delivering shareholder rewards. At the end of the third quarter, the Arizona Charlie’s operator had $68.6 million in cash and cash equivalents with borrowing capacity of $240 million.

That compares with $399 million in outstanding liabilities, which could be driven lower if earnings rise with help from lower interest rates.

Recently, there’s been speculation that Golden could sell and lease back one of its land-based casinos, but the company hasn’t commented on that rumor. Should such a transaction materialize, it would boost the firm’s cash position, but also create long-term rent obligations.