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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Ameristar quarterly profits rise

26 October 2006

LAS VEGAS, Nevada -- Ameristar Casinos' third-quarter earnings announcement Wednesday was anticlimatic.

On Oct. 5, the Las Vegas-based casino operator said its results for the quarter that ended Sept. 30 would be much higher than previously predicted. The announcement sent the company's stock price up more than 13 percent that day.

Ameristar's estimates held up. The company said its third-quarter net income of $21.1 million produced earnings of 37 cents per share. A year ago, the company reported a net income of $16.1 million or 28 cents a share.

Analysts polled by Thomson First Call had predicted 35 cents per share for the latest quarter.

"Our financial results reflect the strength of our operating strategies," Ameristar Chairman Craig Neilsen said in a statement. "We expect to continue the successful application of our cost management strategies for the foreseeable future."

Ameristar's quarterly revenue rose 6.3 percent to $253.6 million compared with $238.6 million in the prior year, based largely on results from its casino in Black Hawk, Colo., just outside Denver, and the Ameristar Council Bluffs in Iowa.

A year ago, results at the Black Hawk casino suffered after a rock slide closed portions of the highway leading into the community. This year, without the disruptions, Ameristar Black Hawk's quarterly revenue more than doubled to $22.3 million from $11.1 million.

In Council Bluffs, where Harrah's Entertainment recently opened a land-based Horseshoe-brand casino, Ameristar Council Bluffs had revenues of $46.4 million in the quarter, compared with $46.9 million a year ago. The latest revenue figure exceeded the company's expectations, Neilsen said.

Morgan Joseph gaming analyst Adam Steinberg said the company's Council Bluffs casinos held up well to the added competition.

"We have also been pleasantly surprised by the resilience of the company's Council Bluffs property," Steinberg said.

During a conference call with gaming analysts, Neilsen said Ameristar, which doesn't operate a casino in Las Vegas, will continue to explore development opportunities.

The company made an effort earlier this year to acquire Aztar Corp., which eventually agreed to a $2.75 billion buyout by Columbia Sussex Corp.

"We demonstrated to the Street that we would be aggressive, maybe a little too aggressive, when it came to Aztar," Neilsen said. "If future opportunities arrive, we're going to be aggressive and proactive. We're looking at a lot of different things right now."

Ameristar announced earnings after trading closed on the Nasdaq National Market. Shares in the company ended the day at $25.20, up 23 cents, or 0.92 percent. ity surrounding the offer, but thanks for trying," Loveman said.