Golden Nugget Q2 Earnings Preview: What’s in the Offing?

Golden Nugget Online Gaming (GNOG) is scheduled to report its second-quarter 2021 earnings on August 15.

Golden Nugget is a digital sports entertainment and online gaming (iGaming) enterprise. Over the past six months, shares of the company have gained almost 11.5% and are trading at around $20.

Solid Q2 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.

Q2 Expectations

For Q2, the Street expects Golden Nugget to report a loss per share of $0.09 and revenues of $32.23 million. (See Golden Nugget Dividend Date and History on TipRanks)

For full-year 2021, GNOG expects revenues in the range of $130 – $145 million.

Prior Quarter Snapshot

In the previously reported first quarter, Golden Nugget delivered strong top-line numbers. Revenues came in at $26.7 million, reflecting an increase of 54.2% year-over-year.

However, the company posted an adjusted loss before interest, taxes, depreciation, and amortization of $3.5 million versus an adjusted EBITDA of $5.9 million in the year-ago quarter.

Meanwhile, net income increased to $69.6 million in Q1 from $4.2 million in the year-ago quarter.

Factors to Note

Golden Nugget Online seems well-positioned to benefit from the growing popularity of online gaming and gambling, particularly on online casino game platforms.

Let’s discuss some of the potential growth catalysts.

Golden Nugget is expanding rapidly in the U.S. During the first quarter, it signed market access agreements with Z Casino in Colorado and the Wild Rose Casinos in Iowa. Both online gambling and online sports betting are covered by these agreements.

In addition to the aforementioned states, Golden Nugget signed market access agreements in West Virginia, Virginia, Pennsylvania, Illinois, and New York and plans to go live in four more states this year.

The expansion of Golden Nugget into new markets increases its revenue visibility. These deals should aid the company’s top-line expansion in future quarters.

Golden Nugget has also been working to expand its current gaming portfolio and launched International Game Technology’s (IGT) slot and table games in Michigan in June.

These initiatives are likely to boost the company’s customer base and revenue in the coming quarters.

It’s worth noting that Golden Nugget agreed to be bought out by sports betting company DraftKings (DKNG) in an all-stock deal on August 9. The deal is expected to close in the first quarter of 2022, pending the necessary approvals.

The news was well-received by investors, as seen by the performance of the stock. Since the deal announcement, the stock price has risen 7.8%.

During the second-quarter earnings call, investors will be looking for additional information from management on the acquisitions front.

Analyst’s Recommendation

Benchmark Co. analyst Mike Hickey changed his recommendation on the stock to a Hold from a Buy after the announcement that Golden Nugget had entered into an agreement to be acquired by DraftKings for an implied equity value of approximately $1.56 billion.

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 1 Buy and 2 Holds. The average GNOG price target of $23.42 implies 17.4% upside potential from current levels.

TipRanks data shows that financial blogger opinions are 90% Bullish on GNOG, compared to a sector average of 70%.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.