Century Casinos, Inc. CNTY
December 22, 2002 - 12:31pm EST by
2002 2003
Price: 2.18 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 30 P/FCF
Net Debt (in $M): 0 EBIT 0 0

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Century Casinos (CNTY) owns and operates casinos is Cripple Creek, Colorado and outside Cape Town, South Africa and manages casinos in Prague and on the ultra-luxury Silversea Cruise Ships.

Century trades at a substantial discount to its peers by just about every measure:

Century Industry
P/E 16.37 24.60
Price/Sales 1.63 1.66
Price/Cash Flow 6.78 11.31
Price/Book 1.96 3.42
Price/Tangible Book 3.00 14.67
Equity/Debt 58/42 29/71

primarily because it is too small to get the attention of the major casino analysts and investors.


The company is tightly run by CEO, Erwin Haitzmann and President, Peter Hoetzinger. Prior to buying a controlling interest in Century they ran Casinos Austria, the Austrian Government’s casino company. The company’s EBITDA has been growing nicely for years: $1.3 million in 1996, $3.7 million in 1997, $6.2 million in 1998, $8.4 million in 1999, $11 million in 2000 (including a one time payment for the sale of their Indiana river boat gaming license), $10.7 million in 2001 and they appear on track for record earnings this year which is why Wells Fargo felt comfortable increasing their revolving credit line to $26 million.


While the stock is cheap based just on their casino in Cripple Creek, Colorado (which produces 74% of revenues), the stock fell sharply when the hoped for casino license in Johannesburg, South Africa was overturned by the High Court of South Africa.

Even though the High Court overturned the license award based on procedural and technical deficiencies, I expect management to try again to get that license. If they are ultimately successful in getting the license in Johannesburg, a casino of the size planned there could well double their revenues.


In the first nine months of this year Century repurchased 77,420 shares at an average of $2.64 and in the fourth quarter they repurchased an additional 35,800 shares at an average of $2.08. Last year Century repurchased 340,000 shares at an average cost of $2.03. Between 1998 and 2001 they repurchased 2,189,000 shares at an average of $1.32.

In addition, the officers and directors have been consistent buyers over the last few years along with the largest shareholder, Lloyd Miller who owns 18.38%.


The management is attempting to do the same thing that they did while managing Casinos Austria - that is, to own and/or manage a large number of casinos around the world. They have the credit lines to continue the prudent pace of expansion that they have done over the last few years. That combined with continued share repurchases by the company should push the stock substantially higher.
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