What happened
Shares of Monarch Casino & Resort (MCRI 1.67%) popped as much as 21.2% in trading on Thursday after the casino company reported third-quarter 2022 financial results. At 3 p.m. ET, shares were up 14.2% and holding steady.
So what
Third-quarter revenue was up 19.8% to $133.7 million, and net income jumped 28.3% to $51.7 million, or $1.41 per share. Analysts were only expecting revenue of $121.8 million and earnings of $1.15 per share. Simply beating estimates is enough to send a stock higher, even in this market.
Management said enhancements to the Black Hawk facility are paying off and it's now planning a renovation of the Atlantis hotel tower next year. This could drive continued growth.
I will also note that Monarch has only $26.2 million of debt on the balance sheet, which is almost unheard of in the casino industry. This gives management the flexibility to acquire competitors, invest in existing facilities, or return cash to shareholders.
Now what
The casino business has been incredibly strong over the past year, and that doesn't seem like it's slowing down. Hotel revenue was strong, as was food and beverage revenue, which indicates that there's broad demand for entertainment, not just gambling.
As much as market observers have talked about a recession and the stock market has dropped, it doesn't seem to be the case that people are pulling back on discretionary spending. Maybe there's a limit to growth given consumers' depleting savings, but we don't see signs of a slowdown yet.
