The chips are beginning to pile up for Pinnacle Entertainment
Pinnacle is still playing at the low-minimum tables, with annual revenues of $530 million that might make a good month for bigger fish such as Caesars Entertainment
Aside from Casino Magic-Biloxi (which was affected by Hurricane Ivan), and the Boomtown-Bossier City La. -- which continues to struggle against better-funded properties owned by Harrah's, Isle of Capri
Pinnacle's Belterra, Ind., casino has established itself as the gem of the company. Occupancy at the property's new hotel tower topped 93%, helping to drive revenues 19% higher to $42.6 million. EBITDA margins expanded by more than five points to 25.5%, resulting in a 50% spike in earnings to $10.9 million. Today's numbers mark the 10th consecutive quarter of record results for the property.
Pinnacle's Boomtown-New Orleans casino also reported impressive results, sidestepping weather-related disruptions to post gains in both revenues and earnings. The casino trails market leader Harrah's by a wide margin but produces double the revenues of Caesars' Bally's casino (which was recently sold to satisfy antitrust regulations concerning Caesars' impending merger with Harrah's). The property, which was already the most profitable in Pinnacle's portfolio, improved EBITDA margins 140 basis points to 28.7%. Companywide margins have risen from 17.6% to 19.7% year to date and reached 21.8% for the quarter.
While the company's existing casinos are gaining momentum, new projects under development hold even more promise. Last month, the Missouri Gaming Commission gave its approval for Pinnacle to proceed with two new properties near St. Louis. Furthermore, construction continues on a $365 million facility in Lake Charles, La., featuring 745 guest rooms and a championship golf course. The new L'Auberge du Lac Casino will vie for visitors from nearby Houston with established players Harrah's and Isle of Capri.
Pinnacle is slowly climbing back into the game, a transition that will be expedited by the addition of several new properties. However, it will be a while before the results of those efforts are visible in the bottom line; until then, the company appears to be little more than an also-ran in the consolidating industry.
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Fool contributor Nathan Slaughter owns none of the companies mentioned.