VICI Properties: A Sin Stock Worth Taking A Gamble On

seekingalpha11-06

VICI Properties' recent price pullback gives the stock an attractive valuation in comparison to some of their retail peers.As a result of their strong growth and fundamentals, VICI deserves to trade ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2481605836?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2165659936/image_2165659936.jpg","is_english":true,"pubTime":"2024-11-06 20:23","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2481605836","market":"us","top_or_hot":-1,"title":"VICI Properties: A Sin Stock Worth Taking A Gamble On","media":"seekingalpha","content":"<div>\n<p>VICI Properties' recent price pullback gives the stock an attractive valuation in comparison to some of their retail peers.As a result of their strong growth and fundamentals, VICI deserves to trade ...</p>\n\n<a href=\"https://seekingalpha.com/article/4732668-vici-properties-sin-stock-worth-taking-gamble-on\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>VICI Properties: A Sin Stock Worth Taking A Gamble On</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nVICI Properties: A Sin Stock Worth Taking A Gamble On\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-06 20:23 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4732668-vici-properties-sin-stock-worth-taking-gamble-on><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>VICI Properties' recent price pullback gives the stock an attractive valuation in comparison to some of their retail peers.As a result of their strong growth and fundamentals, VICI deserves to trade ...</p>\n\n<a href=\"https://seekingalpha.com/article/4732668-vici-properties-sin-stock-worth-taking-gamble-on\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4561","symbol_name":"索罗斯持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4732668-vici-properties-sin-stock-worth-taking-gamble-on","article_id":"2481605836","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2165659936/image_2165659936.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2481605836","pubTimestamp":1730895780,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"VICI Properties' recent price pullback gives the stock an attractive valuation in comparison to some of their retail peers.As a result of their strong growth and fundamentals, VICI deserves to trade i","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4561":"索罗斯持仓","BK4585":"ETF&股票定投概念","VICI":"Vici Properties","BK4588":"碎股","BK4084":"特种房地产投资信托","BK4234":"特殊用途房地产信托"},"translate_title":"VICI Properties：值得一赌的罪恶股票","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"VICI":0.9},"content_text":"VICI Properties' recent price pullback gives the stock an attractive valuation in comparison to some of their retail peers.As a result of their strong growth and fundamentals, VICI deserves to trade in line or at a premium to some of its peers.One reason for their constant undervaluation could be that the stock is considered a sin stock by many investors due to the bulk of their revenue coming from gaming.VICI's strong quarter allowed management to raise guidance for the second time this year, a testament to their quality.In Q3, the REIT was able to grow their FFO, AFFO, and revenue without making any additional acquisitions or transactions.   EyeEm Mobile GmbH/iStock via Getty Images Introduction As a frequent visitor of Las Vegas, most of my family members assume I'm big into gambling. The truth of the matter is I rarely do. If so, I usually take out a $100 bucks to play with. I'm also very impatient, so when my $100 is gone, usually in about 10 mins or less, I'm done gambling. But that doesn't mean I can't be the landlord to some of the most iconic casino hotels in one of the most visited destinations on the planet. The city of sins, also known as Sin City, is well-known for gambling. And among companies that own, promote, or sell potential harmful items like smoking, drinking, and gambling, VICI Properties (NYSE:VICI) is a gamble worth taking in my opinion. Especially since their price remains attractive. In this article, I discuss the company's latest earnings, fundamentals, and why the current entry price remains attractive for long-term investors. Previous Thesis I last covered VICI Properties along with their peer Gaming and Leisure Properties (GLPI) titled: Two REITs Operating Within A Property Sector Accompanied By Unique Value Drivers. Although VICI's share price is slightly up since then, the stock has remained somewhat flat, up less than 2% while the S&P is up 7.37%. Seeking AlphaThe article was co-produced with fellow analyst Cash Flow Venue, and we discussed the company's unique value drivers, which included their longer-than-average leases that averaged 41.2 years. This was an advantage the REIT held over some of its peers, whose leases averaged roughly 10 years. This allowed the company to see stable and predictable cash flows for the foreseeable future. VICI also saw strong leasing spreads of 1.2%, slightly below their peer GLPI who saw spreads of 1.6%. And despite VICI's recent price increase, they were still attractively priced with a P/FFO multiple of 12x. Strong Internal Growth VICI Properties recently reported their Q3 earnings, showing why their share price doesn't seem to match their fundamentals. Despite the solid beat on their top and bottom lines, VICI's share price is actually down slightly at the time of writing. FFO of $0.70 beat analysts' estimates by $0.03 while revenue topped estimates at $964.7 million. While FFO was down a penny from the prior quarter, revenue continued trending upward from $957 million. On an annualized basis, however, both were up solidly, with FFO up over 27% from $0.55 and revenue up 6.7% from $904.3 million in Q3'23. Gaming And Leisure Properties' revenue growth was slightly higher at 7.1% from $359.6 million to $385.3 million over the same period. As far as quarterly activity, VICI invested $230 million through their Partner Property Growth Fund in Q3. With most of the company's rent coming from tenants on the Las Vegas Strip, it's not a surprise they have been funding tenants with capital to upgrade their properties. Because Las Vegas is a frequently visited city, with the popularity of the Sphere, which VICI also owns, this has resulted in increased demand at various hotels throughout the strip. And as the landlord provides capital for upgrades, they're able to charge more rent on the back end. This, along with their long leases that usually average 41.2 years, this ensures VICI sees predictable and stable cash flows for the long term. Below you can see revenue for all their tenants grew year-over-year including their golf revenue, which ultimately resulted in income growth over the same period. VICI press releaseRaised Guidance VICI's solid growth on an annualized basis allowed management to raise their AFFO guidance for the second time this year; the preferred method for assessing dividend safety. REITs often report both FFO & AFFO, but in terms of how the company is covering their dividend, investors should look for growth in their AFFO. Management raised guidance by a penny on their low end and now expects AFFO on a per share basis in a range of $2.25 - $2.26, up from $2.24 - $2.26. During the quarter, this was flat from the previous (quarter) at $0.57 but grew from $0.54 in the previous year's quarter. For comparison purposes, GLPI's AFFO also increased $0.03 from the prior year to $0.95. Author chartOn an absolute basis, AFFO was even more impressive, up nearly $50 million from Q3'23 that saw AFFO of $547.6 million. During their latest quarter, AFFO came in at $593.9 million, an increase of 8.4%, which is very impressive considering the macro environment and no additional acquisitions or transactions. For the full year, management anticipates AFFO of $2.360 billion - $2.370 billion, up from $2.350 billion prior. This is in comparison to GLPI who expects AFFO in a range of $1.055 billion - $1.058 billion, or $3.74 - $3.76 per share. VICI also raised their dividend back in September by 4.2% to $0.4325. This was above analysts' estimates of $0.43. I predicted a quarterly dividend increase between $0.43 - $0.435 for the REIT during that time. And seeing how the company continues to raise their AFFO guidance and has seen solid growth over the years from the chart below, they are likely to continue increasing their dividend for the foreseeable future. HOYA CapitalBalance Sheet Remains Solid VICI Properties total debt stood at $17.1 billion, which has remained flat from the previous year. While this is something I would've liked to see decline by a sizable margin, this is much better than a growing debt load considering higher interest rates currently. Their liquidity levels were strong with $2.9 billion in total liquidity, which included $160 million in cash on hand. They also had additional liquidity of $430 million estimated proceeds as they settled 7 million shares from their forward sale agreement in exchange for proceeds amounting to nearly $201 million. VICI supplementalTheir net debt to adjusted EBITDA of 5.4x was flat from the previous quarter. On an annualized basis, this was down from Q3'23 when their ratio was 5.7x. Peers Gaming And Leisure Properties and EPR Properties (EPR) had slightly lower ratios of 4.74x and 5.0x respectively. However, VICI's was well-within management's targeted range of 5.0x - 5.5x. They do have over $2 billion in debt due next year, but as seen by the company's strong liquidity position, VICI should be able to satisfy this without any issues. Upside Potential As previously mentioned, despite the solid earnings report and growth year-over-year, VICI's price can't seemingly keep up with their fundamentals. This is why I think they are still a buy and great, long-term income generator. Moreover, they still trade below the sector median with a forward P/AFFO multiple of 14.02x. The sector median stands at 16.54x in which, based on their growth and solid fundamentals, the REIT deserves to trade in-line with peers. GLPI has a forward P/AFFO multiple of 13.28x, while EPR has a multiple of 9.21x at the time of writing. Some of their retail peers like Agree Realty (ADC) and Realty Income (O) trade at higher multiples. Wall Street has a price target of nearly $36 for VICI, upside of 13.57%. You also get paid a well-covered dividend from a stock that sports more than a 5% yield. If VICI traded in range with its retail peers, the stock would be trading at roughly $37. And as previously mentioned, fundamentally, VICI deserves a higher valuation. Seeking AlphaRisks Although I own VICI Properties and think they're as fundamentally sound as any quality company, the share price appreciation has been a bit of a letdown. Additionally, REITs have seen a bit of a pullback in the last month, likely due to the upcoming election as well as geopolitical issues. And while I expect some volatility to continue, the stock could see further downside than it already has seen recently, depending on the election outcome. Additionally, VICI's properties have maintained 100% occupancy, even throughout the pandemic. And while this is likely to continue, an unsuspected downturn in the economy could cause foot traffic to decline as a result. And with interest rates still significantly higher than a few years ago, this could strain the REIT's growth capacity and impact their upcoming debt of over $2 billion next year, ultimately dragging on their FFO & AFFO growth in the coming months. Bottom Line With recent volatility in the real estate sector, VICI's share price pullback makes them even more attractive as the REIT trades well-below the sector median with a forward P/AFFO multiple of 14.02x. Fundamentally, VICI is just as good as some of their retail peers like Realty Income and Agree Realty, further solidifying they deserve to trade at a premium. Moreover, the REIT reported a solid Q3 earnings report that saw FFO, AFFO, and revenue all grow solidly from the previous year despite no additional acquisitions or transactions. This is a further testament VICI remains a quality stock that deserves to trade at a higher valuation.  Despite VICI Properties receiving the bulk of its revenue from gaming, and despised by many, their strong fundamentals and growth along with their well-covered dividend make this sin stock worthy of taking a gamble on.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2481605836"}