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Friday, May 20, 2022

Golden Nugget Online Gaming, Inc. (GNOG) Stock has the Potential to Outperform in Market

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Golden Nugget Online Gaming, Inc. (GNOG) is a leader in the online gaming industry and a pioneer in bringing Live Dealer and Live Casino Floor Roulette to the US gaming market. Market Research Future provided a comprehensive research report on the gaming industry that will expand by a CAGR of 8.6% from 2021 to 2030. Its market valuation in 2020 was $177 billion. Also, the company is positioned at the 26/31 spot in the industry.

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GNOG: Recent Developments

On January 6, GNOG informed about its extended collaboration with OtherLevels for an additional two years. As a result of the extension, both companies will expand into West Virginia.

GNOG: Earnings

The earnings and revenue chart of GNOG showed that it recorded a remarkable 40% gain in its revenue and 207% gain in its earnings over the fiscal year 2021 as compared to 2020. The total revenue was $128 million and EPS was reported to be $1.01.

Source: Chartmill

Comparison with Peers

When comparing GNOG with its industry competitors (CDRO, LVS, EVRI; WYNN, BYD, and PENN), it becomes clear that a declining trend was observed over the year as this industry shrank during the pandemic. Only FLL stock showed an improvement in its percentage price change.

Source: Benzinga

Insider Transaction and Analyst Ratings

 The total number of outstanding shares of the company is recorded to be 46.8 million with up to 65% shares being held by the institutional investors and just 9.5% shares owned by the insiders. Most recently, the reputed analyst firm Benchmark’s analyst Mile Hickey rated GNOG shares downgraded from buy to hold.

Risk Factors

A lot of risk factors are involved in buying GNOG shares, so the investors should check the market conditions. Its debt is not well covered by operating cash flow, negative stockholders’ equity, and the company’s stock price is not stable for the last three months, which is risky. Its price-to-earnings ratio is 5.1x which is well below the market (16.8x) and showed an improvement.

Bottom Line

The company’s increased earnings and reduced PE ratio are signs of improvement, so the investors should put their trust in the company’s policies and invest in its stock. Although risks are also associated with buying, they are minor.

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