It may not last but ASCA seems to be bucking the negative economic data and should put up a blow out Q2.



ASCA looks interesting with the recent pullback.  We still think Q2 will be a blowout.  In the meantime, May state gaming revenues will be released starting later this week and we suspect they will generally surprise on the upside – similar to April – especially for ASCA.  Combined with April’s strength, May should provide confirmation of ASCA's terrific near-term earnings outlook.  We are currently at $0.52 versus the Street at $0.44 and our number is looking too low.  We believe analysts will be forced to raise estimates and there is still a lot of room for ratings upgrades. 


The following chart shows how our estimates match up against the Street’s:


ASCA: WHAT BAD ECONOMY? - asca final


State Gaming Revenues

We remain concerned about the macro picture in general but so far in Q2, ASCA has seen no impact.  One possible explanation for the recent strength could be the high grain prices which may be helping some of the Midwestern economies.  Of course, with significant operations in Iowa and Missouri, ASCA’s customers are certainly tied to farming.  Iowa, Missouri, and Indiana could all report May revenues this week, which represents 70% of the company’s property level EBITDA.



Expansion of gaming in Illinois is a real possibility and that would hurt ASCA’s East Chicago casino.  However, even if a bill is signed into law, the impact wouldn’t be felt for 3 years or so.  For ASCA, East Chicago is the least significant operation behind only Jackpot and supplies only about 12% of the company’s property level EBITDA.


Stock Trading Update

Keith bought ASCA in the Hedgeye virtual portfolio today.  He sees short-term upside to $22.19 and intermediate-term support at $19.24.



Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more