Casinos in Clark County and in downtown Las Vegas raked in record amounts of gaming money in May 2022, propelling the state to its 15th consecutive month of $1 billion or more in gambling wins.
Saying that Las Vegas is the most successful gambling market in the US is redundant, but it doesn’t seem like Nevada’s crown jewel is going to slow down any time soon. And it goes for several other markets in the US, one of which is New Jersey. To find out more about the success of online casinos in New Jersey - you can visit igamingnj.com.
There are many statistics thrown around, but how does one evaluate a gambling establishment? There are many moving pieces in place, so you better come prepared. Today we are going to talk about the main ways industry specialists analyze the value of casinos and Nevada, starting with value determination based on assets.
Determining Value by Assets
This is the traditional way of evaluating casinos. This way, you make a fair market value assessment for both assets and liabilities. The estimated worth of a company is then obtained by deducting the cost of satisfying liabilities from the value of the company's assets.
Asset-based valuation, albeit a common method of assessing enterprises, is rarely applied in Las Vegas. It is because the underlying worth of casinos is more closely correlated with their income and cash flow than their assets.
Determining Value by Income
Casinos that are constantly lucrative are often valued using an income-based methodology. Basically, it entails calculating a casino's cash flow for a year and dividing it by its capitalization rate, which is calculated as net income divided by the expected value of its assets.
Determining Value by Stock Prices
Utilize this technique to obtain a ballpark figure for the market value of a publicly listed company. Add the number of shares that are currently available to the stock price. Let’s say a casino has 20 million shares. The price of each share is $10. $200 million is the anticipated price.
The value of a company may be valued by its stock price, but this does not offer the full picture. As an alternative, it displays the value as perceived. Keep in mind the inflated stock prices of Tesla. Even if the business may not be as valuable as some of its rivals, they are still quite the big sharks of the industry.
Determining Value by Cash Flow
This approach works by figuring out how much cash flow shareholders have had from the company's inception. It works well for valuing both older casinos with slower development rates and new casinos with rapid growth rates.
Let's imagine a casino offers its stock investors $50 million in cash. It has also been in existence for 10 years. Some investors may claim that it is worth $500 million. Because future changes in cash flows must be taken into account, this method does not produce correct figures. It's possible for a casino to have $50 million today and $30 million next year. As a result, estimating its worth using historical performance makes little sense.