High-rise project a success

December 14, 2000 10:12 AM
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Now that Station Casinos Inc. (STN) has resolved its problems with the Missouri Gaming Commission and acquired three major "locals" properties to add to its stable of operations, what can be expected in 2001?

That was the question addressed recently by Jason Ader and his team of analysts at Bear Stearns.

"In our opinion," wrote Ader, "2001 will primarily be a transition year for the company as it digests the three acquisitions and completes an ambitious capital project program designed to better position both its new and existing properties in the market." Then there’s the question of competition.

Station’s four original properties could experience some competitive pressure from Suncoast in northwest Las Vegas and Sam’s Town in East Las Vegas in the first half of 2001.

"We believe the market will rapidly absorb this supply increase and that customers will return to Station properties," Ader wrote. "In addition, we believe road construction around Palace Station could affect that property’s results, while renovation disruption at the Santa Fe and The Reserve could temper first-half results." So what advice is Ader giving his clients who ask: "Should I own Station in 2001?"

"Our answer is unequivocally `yes,’ with the caveat that we recognize many of Station’s properties will see limited upside in 2001, and that our cash flow growth estimates for the company’s property’s remain conservative for the year due to increased competition.

"We believe the real upside to cash flow could begin in the latter half of 2001, when Station has digested its recent acquisitions. Our current 2001 estimates reflect this.

Station Casinos stock gets bright green light

Now that Station Casinos Inc. (STN) has resolved its problems with the Missouri Gaming Commission and acquired three major "locals" properties to add to its stable of operations, what can be expected in 2001?

That was the question addressed recently by Jason Ader and his team of analysts at Bear Stearns.

"In our opinion," wrote Ader, "2001 will primarily be a transition year for the company as it digests the three acquisitions and completes an ambitious capital project program designed to better position both its new and existing properties in the market." Then there’s the question of competition.

Station’s four original properties could experience some competitive pressure from Suncoast in northwest Las Vegas and Sam’s Town in East Las Vegas in the first half of 2001.

"We believe the market will rapidly absorb this supply increase and that customers will return to Station properties," Ader wrote. "In addition, we believe road construction around Palace Station could affect that property’s results, while renovation disruption at the Santa Fe and The Reserve could temper first-half results." So what advice is Ader giving his clients who ask: "Should I own Station in 2001?"

"Our answer is unequivocally `yes,’ with the caveat that we recognize many of Station’s properties will see limited upside in 2001, and that our cash flow growth estimates for the company’s property’s remain conservative for the year due to increased competition.

"We believe the real upside to cash flow could begin in the latter half of 2001, when Station has digested its recent acquisitions. Our current 2001 estimates reflect this.