Century Casinos' Turnaround Signals a High-Conviction Play in the Gaming Sector Recovery

The gaming sector’s post-pandemic recovery has been uneven, but Century Casinos, Inc. (CNTY) is emerging as a standout play. Despite a challenging Q1 2025 marked by weather disruptions and operational headwinds, the company’s results signal a turning point: margin resilience, strategic geographic expansion, and undervalued metrics position it to capitalize on the sector’s rebound. Here’s why investors should act now.

Operational Resilience Amid Headwinds

Century Casinos reported a 4% year-over-year revenue decline to $130.4 million in Q1 2025, driven by severe winter storms in North America and the loss of high-margin sports betting revenue in Colorado. Yet, the company’s Adjusted EBITDAR margin held steady at 16%, a testament to cost discipline.

• U.S. Segment: Revenue fell 3% to $93.3 million, but the Adjusted EBITDAR margin stayed at 20%, outperforming Canada and Poland. The newly opened Caruthersville, Missouri casino (launched late 2024) contributed positively, offsetting regional softness.
• Poland: Despite a 5% revenue drop to $20.6 million, management secured a second casino license in Wroclaw, set to open in Q4 2025. This adds critical scale in a market where competition had previously pressured margins.

Undervalued Metrics Highlight Buying Opportunity

While Century reported a net loss of $20.6 million in Q1 (due to non-operational factors like foreign currency losses), its valuation metrics scream undervaluation compared to peers.

• P/E Ratio: CNTY trades at an “At Loss” P/E due to its Q1 net loss. However, its trailing 12-month diluted EPS was -$4.18, with the stock price at $1.495 as of May 5, 2025. This compares starkly with Las Vegas Sands (LVS) at 21.0x and MGM Resorts (MGM) at 14.6x.
  
• Margin Stability: CNTY’s 16% EBITDAR margin is now in line with pre-pandemic levels, while peers like Caesars Entertainment (CZR) and Penn National Gaming (PENN) struggle with negative P/E ratios due to deeper operational issues.

Catalysts for Growth Ahead

1. New Casinos Driving Turnaround:
2. The Caruthersville property is already profitable, and the Wroclaw casino will add ~$20 million in annual revenue by 2026.

3. In Hungary, a new 10-year license (secured in Q2 2025) permits integrated resort operations, creating 200 jobs and boosting tourism in Central Europe.

4. Reduced CapEx Boosts Liquidity:

5. Capital expenditures will drop significantly in 2025 as major projects wrap up, freeing cash for debt reduction or dividends. CNTY’s cash position ($84.7 million) remains solid despite recent outflows.

6. Summer Gaming Season Tailwind:
   
   The summer peak (accounting for 30% of annual revenue in key markets like Missouri) arrives amid improving macro conditions. With inflation cooling and consumer confidence stabilizing, casinos are poised for a strong rebound.

Why Buy Now?

• Valuation Gap: CNTY’s stock trades at 53% below its 5-year average P/E and 34% below its sector median. The current dip is a reaction to temporary factors (weather, one-off losses), not fundamentals.
• Debt Management: While total debt remains high ($339.6 million), the company’s EBITDAR margins and reduced CapEx will ease liquidity risks. The Consolidated First Lien Net Leverage Ratio is manageable, and no major debt maturities loom until 2026.

Risks to Consider

• Geopolitical Uncertainty: Central and Eastern Europe (Hungary/Poland) face political volatility, though CNTY’s licenses are long-term and government-backed.
• Consumer Sentiment: A prolonged economic slowdown could dampen discretionary spending on gaming.

Conclusion: Buy the Dip Ahead of the Turnaround

Century Casinos’ Q1 2025 results are a clear inflection point. Margins are stabilizing, new growth engines (Wroclaw, Caruthersville) are online, and valuation is deeply discounted relative to peers. With summer seasonality and macro tailwinds on the horizon, this is a high-conviction opportunity to buy a fundamentally improving company at a distressed price.

Investors should seize this moment: the stock could rally sharply once Q2 results confirm operational momentum and peers like LVS/MGM continue trading at premiums. The time to act is now.

Disclosure: The author does not hold a position in CNTY at the time of writing.