Value Stock Canterbury Park reports 65% increase in earnings while real estate portfolio offers significant upside.


Canterbury Park (CPHC), the race track and gaming venue, reported first quarter earnings yesterday with a 10% jump in revenues driven by broad growth across all three business segments.

Card Casino revenues increased 8.2% to $7.7 million fuelled by an 18% increase in table games revenues that represented its best result since 2006.  Food and beverage revenues increased 24.5% to $1.4 million primarily due to an increase in the expo center event business and pari-mutuel revenues increased $137,000, or 9.8%, to $1.5 million.

Operating expenses increased 7.2% due to an increased purse, Breeders’ Fund, cost of food and beverage sales but as management were able to constrain the increase to less than revenue growth, net income soared 65% to $513,000.

“We are very pleased with the strong increase in the Company’s 2017 first quarter revenues”

Randy Sampson, Canterbury Park’s President and Chief Executive Officer, commented: “We are very pleased with the strong increase in the Company’s 2017 first quarter revenues compared to the 2016 first quarter as it indicates we are making progress on our strategic plan to grow our core businesses.”

That growth has seen net income grow from $1.02 million in 2013 to $4.2 million in 2016.  The latest results show that growth continuing, yet the company trades on a very affordable PE of less than 11.

The Real Estate Development Portfolio

However, the real hidden asset for this stock lies outside the core business where there are plenty of opportunities to develop real estate assets that are not needed for the gaming operations.

With a total of 383 acres Canterbury Park has identified 140 acres that are under-utilised, not required by the core business and are suitable for development. On May 11, the company submitted a planning approval application to the city for the first phase of an apartment community. This application includes 305 apartment homes on 13.2 acres as the first step in a several month process to seek approval for the project.

If Canterbury Park can achieve the same price per acre as the 24 acre parcel that they sold for $4.3 million in May 2016 then the 140 acre portfolio could have a market value of $25 million.

We cannot be sure that Canterbury Park will achieve that price point.  However, there can be little doubt that the real estate portfolio represents a significant asset for a company with a market cap of just $46 million and zero debt.

Combining the real estate portfolio with a growing gaming business and a TTM PE of 11, Canterbury Park looks like a winner.


Risk Disclaimer: Please be aware that this is a micro-cap stock with additional risks.  This article does not constitute a recommendation to buy or sell.  Investing in stocks or other securities and derivatives is a high-risk activity and not suitable for everyone. It is strongly recommended that individuals should consult with a SEC-registered investment adviser prior to making any investment decisions.

Disclosure: The author holds no positions in any of the stocks mentioned nor has any intentions to initiate any in the next 72 hours.