Feeling Lucky With Accel Entertainment (ACEL)

With the tailwinds that drove Accel Entertainment’s (ACEL) better-than-expected Q4 results persisting, a bet on its stock could pay off handsomely.

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Shares of Accel Entertainment (ACEL) bucked today’s selling trend, rising more than 2% on solid Q4 results reported by the company last night. Indeed, boosted by contributions from its June 2022 acquisition of Century Gaming, Inc. and solid same-store sales growth of 6% in its primary market of Illinois, net revenues for the period climbed 44.6% from the prior year to $278.1 million and came in $2.6 million ahead of the consensus forecast. And with the company also continuing to do an excellent job being more efficient with its resources in light of the higher costs of labor, parts and fuel it has been facing, adjusted earnings were up 27.8% to 23 cents per share, which was also a penny better than anticipated.

More importantly, while ACEL shied away from issuing concrete guidance due to the near-term macroeconomic uncertainty, it did say that the strong tailwinds that drove its outperformance to finish 2022 have so far continued in the current year. In my view, this reflects the strength and resilience of ACEL’s locally-focused business model that is expected to further benefit from the continued investments that bars, restaurants, convenience stores, truck stops and other authorized non-casino establishments are making to improve their gaming offerings and from the growing number of players who are choosing the company’s local high-quality offerings over traditional casinos due to their convenience and appeal. When you couple this with ACEL’s continuous efforts to expand its reach into additional markets outside of Illinois—with the company acquiring yet another gaming operator with 26 gaming locations and approximately 300 gaming terminals in Montana during the latest quarter—I think its operating performance in 2023 will be strong enough for the stock to maintain the nice momentum it’s recently enjoyed in the periods ahead.

Julius Juenemann, CFA is the equity analyst and associate editor of the Forbes Special Situation Survey and Forbes Investor investment newsletters. Accel Entertainment (ACEL) is a current recommendation in the Forbes Investor. To access this and the other stocks being recommended through the Forbes Investor, click here to subscribe.

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