Wall Street Betting on 60% Upside for Everi Holdings Stock
Shares of Everi Holdings Inc (NASDAQ:EVRI) have been on a great trajectory since the stock market bottomed in March 2020.
The mandated quarantines, closed borders, and shuttering of businesses due to COVID-19 added up to a death knell for the tourism industry in the U.S. and around the world. That was bad for Everi Holdings, a company that provides products and financial technology (fintech) to the gaming industry.
But, like many companies, Everi Holdings Inc has adapted and prepared for the eventual reopening of the economy. To that end, during the depths of the pandemic, the company reduced its operating costs and preserved liquidity. On top of that, it focused on enhancing its operational efficiencies and pursued higher-value opportunities.
As casinos and the company’s other customers began to reopen faster than expected, Everi Holdings Inc benefited from its investments in technological innovation and game development through the strong performance of the company’s fintech solutions and installed base of recurring-revenue games.
The result? Vegas is back, and so is Everi!
In the first quarter of 2021, the company reported record revenue; net income; adjusted earnings before interest, taxes, depreciation, amortization (EBITDA); and free cash flow.
That strong start to the year carried into the second quarter, with the company expecting to report another quarter of record revenue, net income, adjusted EBITDA, and free cash flow. (Source: “Everi Announces Expected 2021 Second Quarter Results In Connection With Plan to Refinance Outstanding Debt,” Everi Holdings Inc, June 21, 2021.)
Michael Rumbolz, CEO, said, “Our expected record 2021 second quarter results highlight the ongoing strength of our core recurring revenue businesses and the benefit of our organic growth initiatives.” (Source: Ibid.)
He continued, “Both our Games and FinTech segments are performing significantly above pre-pandemic periods, driving substantial improvements in our total revenue, net income, Adjusted EBITDA, and Free Cash Flow.”
Investors seem more than happy with the direction Everi Holdings Inc is going. As of this writing, EVRI stock is up by:
- 66% over the last three months
- 91% over the last six months
- 75% year-to-date
- 420% year-over-year
- 1,461% since bottoming in March 2020
Chart courtesy of StockCharts.com
EVRI Stock Overview
Everi Holdings provides entertainment and technology solutions to the casino, digital, and video gaming industries in the U.S., Canada, U.K., Europe, Caribbean, Central America, and Asia. (Source: “2020 Annual Report,” Everi Holdings Inc, May 19, 2021.)
The company operates through two segments: Games (Everi Games Holdings Inc.) and FinTech (Everi Payments Inc.).
Through Everi Games Holdings Inc., the company provides video and mechanical reel gaming content and technology solutions; integrated gaming payments solutions; and compliance and efficiency software. Its games segment provides solutions directly to establishments so they can offer their patrons gaming-related entertainment.
Some of the company’s games are “Power Shot,” “The Karate Kid,” “Press Your Luck Whammy Riches,” and “Willie Nelson.” (Source: “Games Library,” Everi Holdings Inc, last accessed July 15, 2021.)
When you’re on the casino floor, you can take advantage of the company’s fintech solutions, including access to cash through automated teller machines (ATMs), credit card cash access transactions, and point-of-sale debit card transactions.
To casino operators, the company provides regulatory compliance solutions, credit bureau services, jackpot payout tax form management, loyalty programs, and maintenance services.
Record Q1 Results
In May, Everi announced that its revenue for the first quarter ended March 31 increased by 12.5% over the first-quarter 2019 revenue to a record $139.1 million. (Source: “Everi Reports 2021 First Quarter Results,” Everi Holdings Inc, May 5, 2021.)
The company believes the first quarter of 2019 is a better comparison for growth, however, since the first quarter of 2020 was hit by the onset of the pandemic.
Everi Holdings Inc’s first-quarter 2021 net income jumped by 247% compared to the same period in 2019, to a record $20.5 million ($0.21 per share). Its adjusted EBITDA increased by 23% over the first quarter of 2019 to a record $75.4 million. Its free cash flow was up by 105%, at $43.5 million.
“We are off to a strong start in 2021 with first quarter record revenue; and all-time quarterly record net income, Adjusted EBITDA and Free Cash Flow,” said Rumbolz. (Source: Ibid.)
He added, “Our strong start to 2021, which has continued into the second quarter, is a great indication that we are already regaining our pre-pandemic momentum, including our expectation that 2021 full year results will exceed the levels achieved in 2019.”
Everi Holdings stock is an excellent gaming tech stock that has seen its share price erase all of its losses associated with the pandemic-related sell-off.
Moreover, because its businesses are performing significantly above pre-pandemic levels, Everi Holdings Inc has been able to report back-to-back record quarterly financial results.
The company expects the good times to continue, with full-year 2021 results that top those of 2019. That bodes well for EVRI stock investors.