Everi Holdings Inc, a United States-based specialist in cash handling technology and electronic game content for the casino industry, would probably expect a “premium multiple” – understood to be a reference to a consideration relative to forecast segmental earnings – before it would consider selling its financial technology or “fintech” business.
So said a Wednesday note from brokerage Telsey Advisory Group LLC.
Everi’s fintech division reported first-quarter revenue of US$56.3 million, an increase of 11.0 percent from the comparable period in 2018.
“The stock has been up most recently on press reports that the company was looking to sell its fintech business,” noted analysts Brian McGill and Alec Cummings in their memo, adding “we… think the company would want a premium multiple to part ways with the business.”
Telsey added that in the case of any disposal Everi might be able to offset gains tax.
The brokerage noted: “The company has a net operating loss of US$360 million on the balance sheet and this could be used to offset a potential gain on sale taxes. Therefore, the company would be able to realise the full amount in a sale.”
The analysts further stated: “If the company was able to monetise the fintech business, it could be debt free. This would give the company quite a bit of flexibility going forward.”
Everi reported net profit of about US$12.4 million for 2018, turning around a US$51.9-million loss incurred in 2017.
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”I do not believe that this event [the collapse of a under-construction building in Sihanoukville] will slow down the issuance of [gaming] licences. Market forces will probably dictate the process as developers evaluate projected future demand for gaming in the region”
Senior partner at business consultancy Global Market Advisors