Stock to Keep Your Eyes on: Isle of Capri Casinos, Inc. (NASDAQ:ISLE)

Isle of Capri Casinos, Inc. (NASDAQ:ISLE) reported earnings for the three months ended April 2016 on June 14, 2016. The company earned $0.62 per share on revenue of $264.87M. Analysts had been modeling earning per share of $0.54 with $266.77M in revenue.

Isle of Capri Casinos, Inc. (NASDAQ:ISLE) reported financial results for the fourth quarter and fiscal year ended April 24, 2016 and other Company-related news.

Fiscal 2016 Fourth Quarter and Fiscal Year 2016 Highlights

  • Diluted net income per share from continuing operations increased to $0.60 per share from $0.08 in the prior year quarter.
  • Eight of 13 properties reported higher year-over-year Adjusted EBITDA in the fourth quarter driven by continued strong performance at our Missouri properties.
  • Adjusted EBITDA increased $0.4 million, to $65.8 million in the quarter compared to the prior year quarter while Adjusted EBITDA margin increased 57 bps, to 24.9%.
  • Fiscal 2016 Adjusted EBITDA increased 5.0% year over year and Adjusted EBITDA margin increased 100 bps, to 21.6%.
  • Our balance sheet continues to get stronger as debt to Adjusted EBITDA ratio was 4.4x at the end of fiscal 2016 compared to 4.9x a year ago.

Financial Highlights

Net revenues for the current quarter were $264.9 million compared to $269.3 million in the prior year quarter, down 1.6%.  Seven of 13 properties reported higher net revenues for the quarter.

Consolidated Adjusted EBITDA was $65.8 million for the quarter compared to $65.4 million in the prior year quarter, up 0.7%.  Consolidated Adjusted EBITDA margins improved to 24.9% from 24.3%.  Operating income increased to $43.2 million from $35.9 million in the prior year quarter.

Interest expense was $16.7 million compared to $20.8 million in the prior year quarter, as a result of our lower overall debt balance as well as the benefits of refinancing our 7.75% Senior Notes due 2019 in the first quarter of fiscal 2016.

On a GAAP basis, diluted income per share from continuing operations was $0.60 compared to diluted income per share from continuing operations of $0.08 in the prior year’s quarter.

The following items impacted income from continuing operations during the fourth quarter of fiscal 2015:

  • We recorded a non-cash impairment charge of $9.0 million in fiscal 2015.
  • We recorded a loss on early extinguishment of debt of $13.8 million in fiscal 2015 related to the tender and refinancing of our 7.75% Senior Notes due 2019.

Operating Results

(All comparisons are to the prior year quarter)

Black Hawk – Net revenues decreased $1.4 million, or 4.0%, to $32.4 million and Adjusted EBITDA decreased $0.9 million to $9.2 million, at our two casinos in Black Hawk. The property results were affected by increased competition in the market this year; in particular, the prior year quarter’s results benefited from construction disruption at a nearby property.

Pompano – Net revenues decreased $2.8 million, or 5.2%, to $51.8 million, and Adjusted EBITDA decreased 7.2%, to $13.8 million at Pompano Park.  Continuing from the third quarter, fewer transient customer trips year over year and an increased competitive environment hampered results in the early part of the quarter; however, the property rebounded to prior year levels in April. Despite the decline, Pompano generated the second highest fourth quarter Adjusted EBITDA since the property’s opening in 2007.

Isle of Capri Casinos, Inc. earnings per share showed an increasing trend of 546.3% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 155%.Analysts project EPS growth over the next 5 years at 4%. It has EPS annual growth over the past 5 fiscal years of 60.6% when sales grew 0.9. It reported -1.6% sales drop, and 684.7% EPS growth in the last quarter.

The stock is trading at $18.43, up 73.54% from 52-week low of $10.62. The stock trades down -14% from its peak of $21.43 and % below the consensus price target of $19.75. Its volume clocked up at 0.27 million shares which is higher than the average volume of 0.24 million shares. Its market capitalization currently stands at $761.90M.

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