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Why Isle of Capri Casinos' Shares Popped 15% in June

By Travis Hoium – Jul 8, 2016 at 10:06AM

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Even flat results had investors impressed last month.

Image source: Getty Images.

What: Shares of Isle of Capri Casinos (NASDAQ: ISLE) jumped 15.3% in June, according to data provided by S&P Global Market Intelligence, after the company wowed investors with its latest earnings report.

So what: Fiscal fourth-quarter revenue fell slightly, to $264.9 million, and adjusted EBITDA rose less than 1%, to $65.8 million. But net income jumped from $3.1 million a year ago to $25.0 million last quarter, or $0.62 per share, which easily topped analysts' estimates.  The company also opened its new $60-million casino in Bettendorf, Iowa, which should help boost revenue in the region.

Now what: Regional gaming is in a funk, so even flat results can be just what investors are looking for right now. That's why flattish revenue and EBITDA gave the stock a boost, even if they aren't impressive long term.

What I find encouraging is the value of the stock, with $211.3 million in EBITDA over the past year compared to $922.7 million in debt, and a $753-million market cap. The enterprise value (debt plus market cap) to EBITDA ratio of 7.9 is low for a company with a solid business. If operations continue their steady pace, the stock has room to run higher.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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