Century Casinos (NASDAQ: CNTY) may eventually think about buying back its own shares of Casinos Poland after selling its two-thirds stake.

In a recent conversation with Century co-CEO Peter Hoetzinger, Stifel analyst Jeffrey Stantial expressed this opinion. Stantial noted that although the long-slumping gaming company has a good risk/reward ratio, the shares "trade at a hyper-cautious" 23% free cash flow yield in comparison to projections for 2025.

That suggests that there may be a relief rally coming, and if it does, it won't come too soon because the stock has lost 18.6% in the last month and 46.1% so far this year. The stock may rise in response to the eagerly anticipated sale of the Casinos Poland share.

"In Poland, management sees segment adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) drifting back to $11 million-plus once the final temporarily closed property re-opens in August,” wrote Stantial. “Management remains committed to a strategic divestiture of Casinos Poland, with discussions re-accelerating as CNTY has concluded the recent license renewal cycle.”

Russia's invasion of Ukraine caused many Ukrainian refugees to flee to Poland, delaying the sale. Numerous Ukrainian citizens have been loyal patrons of Casinos Poland locations.

Century Casinos May Be a Strong Option for a Buyback

According to Stantial, Century's cash balance sheet shows $137 million, which is more than $55 million more than its current market capitalization of $81.62 million.

This suggests that the stock of the local casino operator is receiving virtually no credit for having a solid balance sheet, which may indicate a potential value opportunity. Century management may eventually use share buybacks as a way to let investors know they think the stock is worth investing in.

“At CNTY’s current valuation, management sees repurchases as the most attractive return on capital – though acknowledging the high cost of debt should CNTY re-rate higher before late-24,” observed Stantial.

Stantial has rated the stock as a "buy" and set a $4 price target. Due to expansion expenses, he continued, Century is probably going to hold onto some dry powder for the foreseeable future. It is unlikely that excess money will be used before the firm completes improvements at its casino hotel in Caruthersville, Missouri.

In relation to Missouri...

Along with the Nugget in Sparks, Nevada, and Rocky Gap in Maryland, Century's two sites in Missouri—one in Cape Girardeau and the other in Caruthersville—are essential to the overall investment strategy in the United States.

The operator's Missouri assets seem to be well-positioned to provide long-term dividends, which could serve as a significant stock catalyst.

“Management noted Cape Girardeau has proven surprisingly resilient to the 8/25 Walker’s Bluff opening, though potentially re-accelerating promo spend remains a key risk to monitor,” concluded Stantial. “The $52M Caruthersville boat-to-land project remains on schedule & budget, with management reiterating $3-4M incremental adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) targets (~15% cash-on-cash return). Comparable boat-to-land projects have averaged ~30% cash-on-cash returns.”