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Monarch Casino (MCRI) Hits 52-Week High, Can the Run Continue?

Have you been paying attention to shares of Monarch Casino (MCRI)? Shares have been on the move with the stock up 10.5% over the past month. The stock hit a new 52-week high of $84.98 in the previous session. Monarch Casino has gained 14.8% since the start of the year compared to the -17.6% move for the Zacks Consumer Discretionary sector and the -28.3% return for the Zacks Gaming industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 9, 2022, Monarch Casino reported EPS of $1.02 versus consensus estimate of $0.9 while it beat the consensus revenue estimate by 14.46%.

For the current fiscal year, Monarch Casino is expected to post earnings of $4.99 per share on $464.4 million in revenues. This represents a 41.36% change in EPS on a 17.46% change in revenues. For the next fiscal year, the company is expected to earn $4.84 per share on $484.73 million in revenues. This represents a year-over-year change of -3.01% and 4.38%, respectively.

Valuation Metrics

Monarch Casino may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Monarch Casino has a Value Score of C. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 17X current fiscal year EPS estimates, which is not in-line with the peer industry average of 20.6X. On a trailing cash flow basis, the stock currently trades at 14.7X versus its peer group's average of 14.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Monarch Casino currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Monarch Casino fits the bill. Thus, it seems as though Monarch Casino shares could still be poised for more gains ahead.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Monarch Casino & Resort, Inc. (MCRI): Free Stock Analysis Report
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