Golden Entertainment Stock Cheap, Real Estate Deal Could Be ‘Transformative,’ Says Analyst

Golden Entertainment (NASDAQ: GDEN) is cheap in comparison to its competitors and has real estate that, if sold, could result in considerable upside for the shares, despite the fact that the stock has lost almost 30% of its value this year.

These are the opinions of Texas Capital analyst David Bain, who reduced his earnings before interest, taxes, depreciation, and amortization (EBITDA) projections for The Strat operator by a little amount in a research released on Monday.  Nonetheless, he reaffirmed his "buy" rating and $39 price objective for the company, suggesting an increase of over 77% from current levels.

"We believe GDEN’s Nevada-centric, Strip and Locals segmented portfolio captures greater long-term growth potential than geographically-disperse regional peers. Further, GDEN’s low leverage, visible cash flow, and real estate holdings offer transformative stock upside optionality,” observes Bain.

Golden runs casinos in Las Vegas, Laughlin, and Pahrump, but because it has over 70 gaming taverns in Nevada, most of which are located throughout the Las Vegas Valley, it is closely linked to the success of the Las Vegas locals.

Golden Entertainment Real Estate Could Propel Stock

Golden’s property holdings, particularly the real estate related with The Strat and nine acres of empty ground opposite from that casino hotel, have long been mentioned as options for unlocking shareholder wealth.

Full control of the real estate on which its casinos lie, and that vacant acreage near the Las Vegas Strip, are likely among the reasons Golden Entertainment stock has drawn the sights of some well-known investors, including one who recently turned activist.

Golden's present market capitalization of $576.53 million probably doesn't reflect the value of its real estate, thus Bain's claim that Golden doing something with its property holdings may be "transformative" for the stock isn't incorrect.  The gross revenues from the sale of The Strat's real estate plus the nine acres described above might be nearly or more than double its market worth.

The problem is that in exchange for upfront money, the operator would be assuming a long-term debt in the form of rent payments if it entered into a sale-leaseback with The Strat.

Golden Shareholder Reward Argument in Favor of Stock

As Bain notes, Golden Entertainment's stock is cheap in comparison to competitors; according to 2026 enterprise value/EBITDA projections, it is currently selling at a 20% discount to its peer group.

This discount could be additional evidence that Golden's low leverage and solid balance sheet, which support shareholder rewards, are not being fully appreciated by market participants and that the investment community is not appropriately pricing the operator's property assets into the stock price.

“GDEN’s ~4% dividend yield couples with share repurchases that eliminated 14% of its free float outstanding last year, paying investors to wait for potential valuation re-rating, earnings outperformance and/or transformative upside event,” concludes Bain.