Canterbury Park Holding Corp. :CPHC-US: Earnings Analysis: Q3, 2016 By the Numbers : November 30, 2016

Canterbury Park Holding Corp. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Canterbury Park Holding Corp. – Churchill Downs Incorporated, Dover Downs Gaming & Entertainment, Inc., Scientific Games Corporation Class A, Penn National Gaming, Inc., Eldorado Resorts Inc, Golden Entertainment, Inc. and Full House Resorts, Inc. (CHDN-US, DDE-US, SGMS-US, PENN-US, ERI-US, GDEN-US and FLL-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 16.63 million, Net Earnings of USD 0.93 million.
  • Gross margins narrowed from 33.68% to 33.03% compared to the same period last year, operating (EBITDA) margins now 9.86% from 9.54%.
  • Year-on-year change in operating cash flow of -34.30% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 16.63 13.89 10.39 10.68 16.85
Revenue Growth (%YOY) -1.31 -6.48 5.18 4.08 11.99
Earnings (mil) 0.93 2.27 0.31 0.95 0.81
Earnings Growth (%YOY) 13.87 297.95 -20.05 1.58 30.44
Net Margin (%) 5.57 16.38 2.99 8.93 4.82
EPS 0.21 0.53 0.07 0.23 0.19
Return on Equity (%) 10.45 26.57 3.73 11.71 10.3
Return on Assets (%) 7.41 18.27 2.67 8.78 7.41

Access our Ratings and Scores for Canterbury Park Holding Corp.

Market Share Versus Profits

Revenues History
Earnings History

CPHC-US‘s change in revenue this period compared to the same period last year of -1.31% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CPHC-US is holding onto its market share. Also, for comparison purposes, revenues changed by 19.76% and earnings by -59.30% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 9.54% to 9.86%. For comparison, gross margins were 27.67% and EBITDA margins were 3.78% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

CPHC-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 7.28 days from 19.32 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

CPHC-US‘s change in operating cash flow of -34.30% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s operating (EBIT) margins contracted from 6.17% to 5.81%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from 8.24% to 9.38%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Canterbury Park Holding Corp.

Company Profile

Canterbury Park Holding Corp. engages in hosting pari-mutuel wagering operations and hosts unbanked card games pari-mutuel wagering operations and hosts unbanked card games. It operates through the following segments: Horse Racing, Card Casino, and Food and Beverage. The Horse Racing segment represents operations related to pari-mutuel wagering on simulcast and live horse races. The Card Casino segment involves in unbanked card operations. The Food and Beverage segment includes both concessions and catering and events services. The Company was founded by Curtis A. Samson, Randall D. Sampson, and Dale H. Schenian on March 24, 1994 and is headquartered in Shakopee, MN.

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