VICI Properties Inc. (NYSE: VICI) bets that golf courses and casinos can still make money in the 21st Century.
Thus, VICI is betting against popular wisdom that claims casino gambling and golf are dying activities. VICI owns 28 casinos and four championship golf courses in the United States.
Those properties include such iconic properties as Caesars Palace, Caesars Atlantic City, and Harvey’s Lake Tahoe. Moreover, VICI Properties (VICI) will buy MGM Growth Properties (NYSE: MGP) for $17.2 billion, The Real Deal reports.
MGM Growth’s holdings include the Mirage, the Luxor, and the Excalibur casinos in Las Vegas, the Borgata in Atlanta City and the Yonkers Raceway & Empire City Casino in Yonkers, New York. Under the deal, MGM Resorts will ease the properties from VICI for 25 years for $860 million a year, The Real Deal claims.
Vici can borrow enormous amounts of money. The Real Deal claims Morgan Stanley (MS), JP Morgan (JPM), and Citibank (C) will provide VICI a $9.3 billion line of credit to finance operations.
How Much Money Does VICI Properties make?
Predictably, many people will wonder if VICI Properties can make money. The financial show that VICI can make some money.
VICI (VICI) reported quarterly revenues of $376.40 million and a quarterly operating income of $384.11 million on 30 June 2021. VICI is making money more money.
The quarterly revenues grew from $339.65 million on 30 September 2020 and $257.90 on 30 June 2020, for example. Interestingly, VICI’s quarterly revenues match its quarterly gross profit.
For example, VICI reported a quarterly gross profit of $376.40 on 30 June 2021. Hence, I consider VICI Properties a finance company because most the quarterly revenues match the quarterly gross profit at most banks.
In comparison, the quarterly operating income grew from $139.68 on 30 September 2020 and $257.90 million on 30 June 2020. Thus, VICI properties made money during the pandemic, which is impressive.
How Much Cash can VICI Properties generate?
Finance companies are attractive to value investors because they can generate enormous amounts of cash. Hence, we need to ask much cash can VICI Properties (NYSE: VICI) generate?
VICI reported a quarterly operating cash flow of $254.74 million on 30 June 2021. Comparatively, the quarterly operating cash flow rose from $174.82 million on 30 June 2020 and $213.93 million on 30 September 2020.
Conversely, the quarterly ending cash flow fell from $1.309.45 billion on 30 June 2020 to $84.99 million on 30 June 2021. Hence, VICI Properties can generate enormous amounts of cash.
Unfortunately, VICI Properties also burns enormous amounts of cash it reported a “quarterly ending cash flow” of -$3.716 billion on 30 September 2020.
Can VICI Properties recover from the pandemic?
Predictably, VICI finished the Pandemic with less cash and more debt. Its cash and short-term investments fell from $3.681 billion on 30 June 2020 to $408 million on 30 June 2021.
Similarly, the total debt rose from $6.758 billion on 30 June 2020 to $7.074 billion on 30 June 2021. The good news here is that the debt increase was slight.
To its credit, VICI Properties pays its debts. Notably, the quarterly financing cash flow fell from $1.129 billion on 30 June 2020 to -$179.45 million on 30 June 2020.
Hence, VICI survived the pandemic, but it is weaker. Thus, I think VICI could make money if gambling recovers from COVID-19 and the pandemic dies down. For example, if vaccines can keep the pandemic under control.
How Much money can VICI Properties make?
Casinos still make enormous amounts of money. Statista estimates 2020 US casino gaming revenues at $29.982 billion.
Moreover, Nevada is still the leader in American gaming. Statista estimates the Silver State’s 2020 casino gaming revenue at $7.873 billion.
Overall, US casino gaming revenues fell by 31.3% in 2020, the American Gaming Association (CGA) estimates. Revenues fell because casinos were closed on 27% of their normal operating days in 2020, Forbes estimates.
Gamblers are returning to Las Vegas
Hence, casinos could recover in 2021 as gamblers return. I think VICI’s management is betting that the gamblers will return.
Data shows that bet is good. Air passenger traffic at Las Vegas’s McCarran international Airport grew by 60% between February and March 2021, The Las Vegas Review Journal claims. In detail, 1.6 million passengers went through McCarran in February 2021. That number grew to 2.6 million in March 2021. Passenger traffic grew from two million in March 2020.
Thus, the gamblers are returning to Vegas which is good for VICI Properties (VICI). Consequently, the immediate future is bright for VICI Properties.
Is VICI Properties a value Investment?
VICI Properties (NYSE: VICI) is a growing stock. Mr. Market paid $22.88 for VICI shares on 7 August 2020 and $30.05 for VICI on 12 August 2021.
I think that price is cheap because VICI pays a growing dividend. VICI will pay a 36¢ quarterly dividend on 23 September 2021. The dividend will grow from 33¢ on 23 June 2021. That dividend grew from 29.75¢ on 29 June 2020.
Overall, VICI shares offered a $1.44 Forward Annualized Dividend and a 4.74% dividend yield on 10 August 2021. Hence, I consider VICI an attractive dividend stock because of its low share price. In addition, I think VICI’s growth gives a high margin of safety and makes it a value investment.
VICI’s Amazing Growth
Stockrow data shows VICI’s revenues grew during every quarter of the pandemic year. For example, VICI’s revenues grew by 16.83% in the quarter ending on 30 June 2020.
The revenue growth rate rose to 52.64% in the quarter ending on 30 September 2020, 57.04% in the quarter ending on 31 December 2020, 46.79% in the quarter ending on 31 March 2021, and 45.95% in the quarter ending on 30 June 2021. Thus, VICI delivered a revenue growth rate of around 50% during a pandemic that closed most of the nation’s casinos.
If VICI can grow at that rate during the pandemic. I think it could be in for explosive growth as gamblers return to the tables and the machines.
If you want to bet on a growing real estate investment trust (REIT) and a gaming stock. VICI Properties deserves a look. This company could make money from gaming growth.
Originally published at https://marketmadhouse.com on August 10, 2021.
