ASCA and PNK appear to have the most near-term earnings upside.
The regional gaming revenues have been reported by all of the states and the performance was solid. We analyze sequential revenues based on the prior 3 months, seasonally adjusted. As the chart below shows, April sequential revenues for the riverboat market came in more than 3% higher than the projection - the 3rd straight month of sequential revenue improvement. The consumer shook off high gas prices and bad weather (tax refunds?).
Of the regionals, ASCA and PNK performed the best in April and they appear to have the most upside to near-term earnings expectations. Comparisons for the rest of the quarter are easy and the strength appears to have carried into May. In the last couple of weeks, sell side has been playing catch up as many analysts have raised their ratings and price targets on these two companies. We still believe consensus is too low. The following table shows the differential between our EBITDA projections and consensus:
