Core Viewpoint - The article emphasizes the importance of value investing and highlights Accel Entertainment (ACEL) as a strong candidate for value investors due to its favorable financial metrics and Zacks Rank [2][4][8]. Company Analysis - Accel Entertainment (ACEL) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - The stock is currently trading at a P/E ratio of 13.54, significantly lower than the industry average of 32.85, suggesting it may be undervalued [4]. - ACEL's P/B ratio stands at 4.58, compared to the industry's average P/B of 11.62, further indicating its relative undervaluation [5]. - The P/S ratio for ACEL is 0.79, which is lower than the industry average of 1.17, reinforcing the notion of undervaluation [6]. - ACEL's P/CF ratio is 8.90, well below the industry's average of 30.77, highlighting its attractive cash flow outlook [7]. - Overall, the financial metrics suggest that Accel Entertainment is likely undervalued and stands out as one of the market's strongest value stocks [8].

Core Viewpoint - Accel Entertainment (ACEL) shows a promising investment opportunity due to a significant improvement in its earnings outlook, with analysts raising their earnings estimates, which may lead to continued stock momentum [1][2]. Current-Quarter Estimate Revisions - The expected earnings for the current quarter are $0.20 per share, reflecting a year-over-year decrease of 23.08% - The Zacks Consensus Estimate for Accel Entertainment has increased by 6.06% over the last 30 days, with one estimate raised and no negative revisions [4]. Current-Year Estimate Revisions - For the full year, the earnings estimate stands at $0.89 per share, indicating a year-over-year decline of 7.29% - There has been a positive trend in estimate revisions, with two estimates moving up and no negative revisions, resulting in a 6.04% increase in the consensus estimate [5]. Favorable Zacks Rank - Accel Entertainment currently holds a Zacks Rank 2 (Buy), attributed to the positive estimate revisions, which historically correlate with stock performance - Stocks rated Zacks Rank 1 (Strong Buy) and 2 (Buy) have shown significant outperformance compared to the S&P 500 [6]. Bottom Line - The stock has gained 5.2% over the past four weeks, driven by solid estimate revisions, suggesting that the earnings growth prospects may further elevate the stock price, making it a potential addition to investment portfolios [7].

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting the use of a specific screening strategy to identify stocks with strong fundamentals and positive price momentum. Group 1: Trend Analysis - The trend in short-term investing is crucial, and confirming its sustainability is essential for profitability [1][2] - A predefined screening strategy, "Recent Price Strength," helps identify stocks with sufficient fundamental strength to maintain their upward trend [3] Group 2: Stock Example - Accel Entertainment (ACEL) - Accel Entertainment (ACEL) has shown a solid price increase of 7.7% over the past 12 weeks, indicating investor confidence [4] - The stock has also increased by 5.2% in the last four weeks, suggesting that the upward trend is still intact [5] - ACEL is trading at 85.5% of its 52-week high-low range, indicating a potential breakout [5] Group 3: Fundamental Strength - ACEL holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6] - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [7] Group 4: Additional Insights - The article suggests that ACEL may continue its price trend without reversal in the near future, and encourages exploring other stocks that meet the screening criteria [8] - The effectiveness of stock-picking strategies can be backtested using tools like the Zacks Research Wizard, which offers insights into successful strategies [9]

Group 1 - The core viewpoint is that Accel Entertainment (ACEL) has significant upside potential, with a mean price target of $14.67 indicating a 27.3% increase from the current price of $11.52 [1] - Analysts have set short-term price targets ranging from $14 to $15, with the lowest estimate suggesting a 21.5% increase and the highest indicating a 30.2% upside, alongside a standard deviation of $0.58, reflecting a consensus among analysts [2] - There is a growing optimism regarding ACEL's earnings prospects, as indicated by a 6% increase in the Zacks Consensus Estimate over the past month, with two estimates revised higher and no negative revisions [10][11] Group 2 - The Zacks Rank for ACEL is 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, suggesting a strong potential for near-term upside [11] - Analysts' agreement on higher earnings estimates is a strong indicator of potential stock price movements, as empirical research shows a correlation between earnings estimate revisions and stock price trends [9]

Group 1 - Accel Entertainment (ACEL) is currently outperforming the Consumer Discretionary sector, with a year-to-date return of approximately 12.2%, compared to the sector's average return of 7.9% [4] - The Zacks Rank for Accel Entertainment is 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] - Over the past three months, the Zacks Consensus Estimate for ACEL's full-year earnings has increased by 6%, reflecting improved analyst sentiment [4] Group 2 - Accel Entertainment is part of the Gaming industry, which consists of 41 stocks and currently ranks 163 in the Zacks Industry Rank [6] - The average return for stocks in the Gaming industry this year is 18.2%, suggesting that ACEL is slightly underperforming its industry [6] - Another stock in the Consumer Discretionary sector, Funko-A (FNKO), has significantly outperformed with a year-to-date increase of 49.7% and a Zacks Rank of 1 (Strong Buy) [5]

Momentum investing is essentially the opposite of the tried-and-tested Wall Street adage -- "buy low and sell high." Investors following this investing style typically avoid betting on cheap stocks and waiting long for them to recover. They believe instead that one could make far more money in lesser time by "buying high and selling higher." Everyone likes betting on fast-moving trending stocks, but it isn't easy to determine the right entry point. These stocks often lose momentum when their future growth p ...

Financial Data and Key Metrics Changes - The company reported revenue of $302 million for Q3 2024, representing a year-over-year increase of 5.1% [23] - Adjusted EBITDA for the quarter was $46 million, reflecting a year-over-year increase of 3.9% [23] - As of September 30, the company had 25,729 terminals and 4,014 locations, with year-over-year increases of 4.1% and 2.8% respectively [23] - Capital expenditures for the quarter were $17 million, with projections for 2024 CapEx to be between $60 million and $65 million, a decrease of over 20% from the previous year [25] Business Line Data and Key Metrics Changes - In Illinois, revenue per location was $839 per day, an increase of 1.7% year-over-year [24] - In Nebraska, revenue per location was $257 per day, showing a significant increase of 16.8% year-over-year [24] - The company is focusing on optimizing its location portfolio, having strategically closed 22 underperforming locations [9][10] Market Data and Key Metrics Changes - The largest market, Illinois, experienced market-wide GGR growth of 5% year-over-year, outperforming Illinois casinos which were down 1% year-over-year [8] - The company is seeing strong revenue growth in Nebraska, driven by higher hold per day and a strategic product shift [11] Company Strategy and Development Direction - The company aims for low single-digit revenue growth, mid-single-digit EBITDA growth, and high single-digit free cash flow growth [14] - Future growth levers include organic growth in Illinois, Nebraska, and Georgia, as well as pursuing M&A opportunities [15][16] - The acquisition of Fairmont Park is expected to close in early December, which includes a master sports betting license and opportunities for local casino development [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate inflation and tax increases by optimizing cost structures [32] - The introduction of ticket in, ticket out (TITO) is anticipated to enhance customer experience and operational efficiency, expected to roll out in the first half of 2025 [12][50] - The company remains optimistic about growth opportunities in the local gaming market, which is seen as an attractive niche within the broader gaming industry [29] Other Important Information - The company has approximately $289 million in net debt and $538 million in liquidity, with ongoing progress on a $200 million share repurchase program [26] - The company is focused on maintaining strong partnerships with regulators across various states [13] Q&A Session Summary Question: Why is now the right time for location closures? - Management indicated that closures are part of a continuous evaluation process, influenced by inflation and recent tax hikes impacting profit margins [31][32] Question: Updates on the Fairmount acquisition and sports betting arrangements? - Construction costs for Fairmount are in line with projections, and the partnership with FanDuel is expected to be favorable for both parties [33][35] Question: Any new M&A opportunities in the sub-$25 million EBITDA level? - The company has seen increased market inventory and narrowing bid-ask differentials, indicating potential for more local partnerships [38][39] Question: What state legislation is being monitored for potential impacts? - Key states being tracked include Pennsylvania, Virginia, North Carolina, and Missouri, with a focus on North Carolina due to its revenue needs [41][42]

Accel Entertainment (ACEL) came out with quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.18 per share. This compares to earnings of $0.22 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 22.22%. A quarter ago, it was expected that this company would post earnings of $0.21 per share when it actually produced earnings of $0.25, delivering a surprise of 19.05%. Over the last four quarters, the co ...

Financial Performance - Total net revenues for Q3 2024 were $302.2 million, an increase of $14.7 million, or 5.1%, compared to Q3 2023[137]. - Net gaming revenue increased by $15.8 million, reflecting growth in gaming locations and terminals, totaling $289.9 million in Q3 2024[137]. - Operating income for Q3 2024 was $21.8 million, a decrease of $3.3 million, or 13.0%, from $25.1 million in Q3 2023[137]. - Net income for Q3 2024 was $4.9 million, a decrease of $5.6 million, or 53.2%, from $10.5 million in Q3 2023[137]. - Total net revenues for the nine months ended September 30, 2024, were $913.5 million, an increase of $40.1 million, or 4.6%, compared to the prior-year period[153]. - Adjusted EBITDA for the three months ended September 30, 2024, was $45.9 million, an increase of $1.7 million or 3.9% compared to the prior-year period[171]. Expenses and Costs - Total operating expenses increased by $18.0 million, or 6.9%, to $280.4 million in Q3 2024[137]. - Cost of revenue for the three months ended September 30, 2024, was $210.8 million, an increase of $12.1 million, or 6.1%, driven by higher net gaming revenue[141]. - General and administrative expenses for the three months ended September 30, 2024, were $47.9 million, an increase of $2.7 million, or 6.1%, due to higher payroll-related costs[143]. - Cost of revenue for the nine months ended September 30, 2024, was $633.3 million, an increase of $28.7 million, or 4.8%, driven by higher net gaming revenue[154]. - Other expenses, net for the nine months ended September 30, 2024, were $13.6 million, an increase of $8.6 million, or 172.1%, primarily due to higher fair value adjustments related to acquisitions[156]. Tax and Interest - The effective tax rate for Q3 2024 was impacted by a decrease in income tax expense to $3.6 million, down 22.9% from the prior year[137]. - The effective tax rate for the nine months ended September 30, 2024, was 31.3%, compared to 36.1% in the prior-year period[160]. - Interest expense, net rose to $9.2 million, an increase of $749,000, or 8.9%, compared to the previous year[137]. - A 1.0% increase in interest rates would lead to an annual increase in interest expense of approximately $2.6 million, assuming the balance remains at $556.3 million[188]. Gaming Operations - The number of gaming locations increased to 4,014 in 2024, a growth of 108 locations or 2.8% compared to 3,906 in 2023[162]. - As of September 30, 2024, the total number of gaming terminals increased to 25,729, up by 1,025 terminals or 4.1% from 24,704 in the previous year[164]. - Location hold-per-day in Illinois increased to $839 for the three months ended September 30, 2024, up by $14 or 1.7% from $825 in the prior-year period[166]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2024, was $107.7 million, reflecting an increase of $15.7 million or 17.0% compared to the prior-year period[181]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $90.2 million, a decrease of $54.8 million or 154.8% compared to the prior-year period[182]. - The company had $265.1 million in cash and cash equivalents as of September 30, 2024[172]. - The company borrowed an additional $119.0 million on the delayed draw term loan facility in October 2024, with $35.0 million anticipated for a pending business acquisition[176]. - As of September 30, 2024, borrowings under the senior secured credit facility amounted to $556.3 million[188]. Corporate Actions and Outlook - The company is monitoring macroeconomic conditions closely, with potential financial or operational actions planned if adverse impacts are observed[124]. - The company is pursuing a pending acquisition of the FanDuel Sportsbook & Horse Racing in Collinsville, Illinois, to expand its market presence[117]. - The company anticipates capital expenditures to be approximately $60–65 million in 2024[182]. - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures, concluding they were effective at the reasonable assurance level as of September 30, 2024[191]. - There were no changes in internal control over financial reporting that materially affected the company's reporting during the quarter ended September 30, 2024[192].

Financial Data and Key Metrics Changes - The company reported record revenue of $309 million for Q2 2024, representing a year-over-year increase of 5.7% [17] - Adjusted EBITDA for the quarter was $50 million, reflecting a year-over-year increase of 6.5% [17] - As of June 30, 2024, the company had 25,757 terminals and 4,034 locations, with year-over-year increases of 5.7% and 4.7%, respectively [17] Business Line Data and Key Metrics Changes - Revenue per location in core states: Illinois at $862 per day (up 0.5%), Montana at $612 per day (up 7.6%), Nevada at $843 per day (down 2%), and Nebraska at $255 per day (up 7.6%) [17] - The increase in Illinois, Montana, and Nebraska was driven by increased player demand, new equipment, and favorable weather [17] - The decline in Nevada was attributed to an overall increase in supply in the greater Las Vegas locals market [18] Market Data and Key Metrics Changes - The home market in Illinois experienced market-wide GGR growth of 5% year-over-year, with Accel outperforming this by growing revenues by 6% [7] - The company added almost 50 locations nationwide, with 30 in Illinois and 11 in Montana [8] Company Strategy and Development Direction - The company aims for steady state growth with low single-digit revenue growth, mid-single-digit EBITDA growth, and high single-digit free cash flow growth [11] - The primary growth levers include organic growth in Illinois, Nebraska, and Georgia, selectively owning establishments, and preparing for future opportunities in new states [11] - The acquisition of Fairmount Park for approximately $35 million in Accel stock is expected to enhance the company's local gaming capabilities and is anticipated to close in Q4 2024 [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position and growth trajectory, despite trading at a low double-digit free cash flow yield [21] - The local gaming segment is viewed as an attractive growing market with opportunities for strong revenue and EBITDA growth [22] Other Important Information - Capital expenditures for Q2 were $18 million, with a projected decrease in CapEx for 2024 to between $55 million and $65 million [18] - The company is progressing in its $200 million share repurchase program, having repurchased 906,000 shares at an average price of $10.16 [19] Q&A Session Summary Question: On the M&A front, are there similar opportunities to Fairmount? - Management indicated that other opportunities resemble Fairmount but vary in scale and specifics, with the ability to take on more projects while working on Fairmount [24][26] Question: Can you discuss the Illinois gaming tax increase and TITO? - Management believes TITO will enhance player experience and potentially provide a market lift of 5% to 10%, helping to offset the tax increase [27][28] Question: Any changes in demand in Nevada? - Management noted no noticeable changes in demand, attributing the decline to supply influx [30][31] Question: How do you see the Montana portfolio evolving post-acquisition? - Management expressed excitement about growth opportunities in Montana, highlighting new software and models that have improved contracts and partnerships [32][33] Question: How should we think about cash deployment post-acquisition? - Management emphasized growth as the first priority for cash deployment, followed by returning capital to shareholders as free cash flow generation increases [34][35] Question: Will the M&A stance change after the Fairmount purchase? - Management confirmed that the M&A strategy remains aggressive, with ongoing pursuit of local gaming opportunities [41][42]