We Think That There Are Issues Underlying Century Casinos' (NASDAQ:CNTY) Earnings

By
Simply Wall St
Published
November 11, 2021
NasdaqCM:CNTY
Source: Shutterstock

Century Casinos, Inc.'s (NASDAQ:CNTY) stock was strong after they reported robust earnings. However, we think that shareholders may be missing some concerning details in the numbers.

View our latest analysis for Century Casinos

earnings-and-revenue-history
NasdaqCM:CNTY Earnings and Revenue History November 12th 2021

The Impact Of Unusual Items On Profit

To properly understand Century Casinos' profit results, we need to consider the US$6.9m gain attributed to unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. If Century Casinos doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Century Casinos' Profit Performance

We'd posit that Century Casinos' statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that Century Casinos' statutory profits are better than its underlying earnings power. The good news is that it earned a profit in the last twelve months, despite its previous loss. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, we've found that Century Casinos has 3 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

This note has only looked at a single factor that sheds light on the nature of Century Casinos' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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