New High-Quality Venues Will Expand Regional Gaming Markets

Key Takeaways

• New property openings, operational efficiencies, and data-driven marketing are expected to drive revenue growth, margin expansion, and improved guest retention.
  
• Expanded regional footprint and flexibility in entering emerging markets position the company for sustained growth despite broader economic uncertainties.
  
• Heavy reliance on new property performance, funding risks, industry headwinds, rising competition, and unsustainable cost cuts threaten both revenue growth and long-term earnings stability.

Catalysts

Owns, leases, operates, develops, manages, and invests in casinos, and related hospitality and entertainment facilities in the United States.

• Ongoing ramp-up and future opening of new, higher-quality properties—particularly the development of the permanent American Place facility in Illinois and operational improvements at Chamonix—position Full House Resorts to capture outsized revenue growth and margin expansion as they tap into underserved and unsaturated regional gaming markets, supporting multi-year top-line and EBITDA increases.
  
• The company's upgraded leadership team and data-driven marketing investments are expected to drive more effective customer targeting and engagement, allowing Full House to broaden its addressable market and improve guest frequency and retention, which should translate into higher revenues and stronger property-level margins over time.
  
• Secular shifts toward increased domestic leisure travel and experiential entertainment, especially as U.S. consumers favor “staycations” and regional getaways, benefit Full House’s regional portfolio and should support resilient demand and steady revenue streams even in periods of macroeconomic uncertainty.
  
• Expanded operational efficiencies, including substantial annualized cost reductions and process innovations across major properties, are anticipated to directly improve net margins and cash generation, accelerating the company's pathway out of elevated leverage and enabling reinvestment for future growth.
  
• Full House’s diversified market footprint and ability to pivot into newly-legalized gaming jurisdictions or potentially relocate licenses (as seen with the Indiana study) creates long-term optionality for accretive expansion, offering upside to both revenue and net income as demographic and regulatory trends evolve nationwide.

Full House Resorts Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Full House Resorts's revenue will grow by 7.7% annually over the next 3 years.
• Analysts are not forecasting that Full House Resorts will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Full House Resorts's profit margin will increase from -13.2% to the average US Hospitality industry of 8.0% in 3 years.
• If Full House Resorts's profit margin were to converge on the industry average, you could expect earnings to reach $29.7 million (and earnings per share of $0.76) by about July 2028, up from $-39.2 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.7x on those 2028 earnings, up from -4.1x today. This future PE is lower than the current PE for the US Hospitality industry at 23.7x.
• Analysts expect the number of shares outstanding to grow by 3.38% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.6%, as per the Simply Wall St company report.

Full House Resorts Future Earnings Per Share Growth

Risks

• The company’s strategy and growth projections rely heavily on ramping up recently opened or expanded properties (Chamonix, American Place), but they are currently not profitable or only modestly profitable, posing execution risk and the potential for disappointing revenue and margin growth if the properties underperform management’s long-term targets. This could significantly impact net margins and long-term earnings.
  
• The company acknowledges difficulties in acquiring new, high-value sports betting contracts, as the market has consolidated around dominant players (DraftKings, FanDuel). The loss of legacy contracts and unlikelihood of replacing them on favorable terms implies a secular revenue headwind in an area of the industry that is supposed to provide growth, impacting overall revenue growth and diversification.
  
• Full House Resorts is committing additional capex and pursuing major construction (permanent American Place) that is reliant on funding from the bond market or alternative sources. Should financial markets tighten or funding become more expensive, high leverage and debt costs could suppress net income and increase balance sheet risk, introducing the risk of dilution or long-term suppressed earnings.
  
• The regional gaming market remains vulnerable to oversupply and rising competition, both from new physical casinos and from the ongoing shift toward online gaming, which Full House admits it is not positioned to compete in directly. This could erode property-level revenues, reduce visitation, and pressure property margins, especially as customer preferences shift, thereby threatening revenue stability.
  
• Operational improvements and positivity are currently driven in part by aggressive cost-cutting and management turnover; dependence on these one-time savings is not necessarily sustainable. If revenue fails to ramp alongside these changes, long-term net margin improvement and earnings growth could be limited, especially if additional ongoing capex or wage inflation in the hospitality industry emerge.

Valuation

• The analysts have a consensus price target of $4.75 for Full House Resorts based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $6.0, and the most bearish reporting a price target of just $4.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $371.8 million, earnings will come to $29.7 million, and it would be trading on a PE ratio of 8.7x, assuming you use a discount rate of 11.6%.
• Given the current share price of $4.49, the analyst price target of $4.75 is 5.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.