NEW YORK (TheStreet) -- Shares of Isle of Capri Casinos, Inc. (ISLE) are soaring 10.70% to $9.83 after Deutsche Bank (DB) said that Gaming and Leisure Properties (GLPI) could pay $15.82 per share, for the company, which would be a total purchase price of $1.62 billion including debt, provided the assumed purchase multiple is 9.0x.
Deutsche Bank said a sale leaseback is a possibility, but an outright sale of Isle of Capri seems more likely.
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Separately, TheStreet Ratings team rates ISLE OF CAPRI CASINOS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ISLE OF CAPRI CASINOS INC (ISLE) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 211.8% when compared to the same quarter one year ago, falling from -$45.39 million to -$141.52 million.
- The debt-to-equity ratio is very high at 55.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ISLE maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, ISLE OF CAPRI CASINOS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- ISLE OF CAPRI CASINOS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ISLE OF CAPRI CASINOS INC reported poor results of -$3.26 versus -$1.33 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus -$3.26).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: ISLE Ratings Report
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