Why Global Cash Access Holdings, Inc. Shares Plummeted Today

Is Global Cash Access Holdings' drop meaningful? Or just another movement?

Mar 26, 2014 at 2:17PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Global Cash Access Holdings, (NYSE:GCA) plunged 16% Wednesday after the company announced its cash access agreements with Caesars Entertainment will not be renewed.

So what: Under the existing contract, which is set to expire on March 31, 2014, Global Cash Access provided Caesars' ATM services, point-of-sale debit and credit card cash access services, and ticket redemption device services. GCA has agreed to continue working with Caesars during a transition period to facilitate transfer of services to another provider.

In explaining the decision, GCA stated it was "not willing to accept the business and financial terms proposed by Caesars regarding the renewal of these agreements." Instead, GCA insists it will continue to focus resources on "further strengthening relationships with its key strategic customers."

Now what: This shouldn't come as a big surprise. Remember, when GCA reported fourth quarter results just two weeks ago, it warned investors it was anticipating "less favorable pricing terms associated with several customer contract renewals." Apparently Caesars' terms simply weren't worthwhile.

Notably, however, GCA also reaffirmed its full year 2014 guidance, which calls for earnings per share between $0.82 and $0.87, and adjusted earnings before interest, taxes, depreciation and amortization between $73 million and $76 million.

This doesn't rule out the possibility of GCA opting out of future gaming industry contract renewals, but at least investors can take solace knowing GCA doesn't overwhelmingly rely on such deals. What's more, even taking the low end of GCA's 2014 guidance means shares are currently trading around 8 times this year's expected earnings. As a result, I think today's drop could represent a solid opportunity for patient long-term investors to step in.

The 3 stocks in this free report could help you retire rich
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers