Gaming Partner – fair odds!

Have you ever gamble in a Casino in Las Vegas?  If yes, you’ve probably used Gaming Partners chips.  Are you afraid to gamble on Gaming Partners?  Lets see the odds.



Gaming Partners International manufactures and distributes casino table equipment. The company’s products include casino chips, felt table layouts, playing cards, dice, gaming furniture, and miscellaneous table accessories. These miscellaneous accessories—such as chip trays, drop boxes, and dealing shoes—are used in conjunction with casino table games such as blackjack, poker, baccarat, craps, and roulette.

The Company is headquartered in Las Vegas, Nevada and has manufacturing facilities in Las Vegas.  GPIC is one of the leading manufacturers and suppliers of casino table game equipment in the world.  Gaming Patrners manufacture and supply gaming chips, table layouts, playing cards, gaming furniture and table accessories, dice, radio frequency identification device (RFID) readers and software, and roulette wheels, all of which are used with casino table games such as blackjack, poker, baccarat, craps and roulette. Our products fall into two categories – non-consumable and consumable. Non-consumable products consist of gaming chips, gaming furniture, and table accessories. These products have a useful life of several years or longer. Sales of non-consumables are based on casino openings, expansions and rebrandings, as well as replacement in the normal course of business. Consumable products consist of table layouts, cards, and dice and due to their use represent recurring revenue for the Company. These products have a useful life that ranges from several hours for playing cards and dice to several months for layouts.


Management is in the game with us.  The principal owner is Elisabeth Carrette and she has effective control over the shares of Eric P. Endy.  With her 49.5% and Eric 3.39% they have effective control of the company.  This could be a bad situation if the control was on different voting structure, but Elisabeth and Eric are owners of the same shares you and I could buy.  We are in the same boat and history proves that this boat is floating comfortably.

The current management never issued dividend and does not plan to do so.  If you are getting in hoping they’ll distribute the massive amount of cash hold in the company, you are shooting wild.  The company grows by nice acquisition and faire prices but does not intend to give cash back to shareholders in the near or long term future.

The current president receives nice compensation for his efforts with the company.  A base salary of 300k plus options on performance results in a global compensation in the range of 0.5M to 1M  for Gregory S. Granau.  It is a little to high for the liking considering this company is making net income of around 4M a year.


Balance sheet

The company has a good load of cash.  Cash and equivalents sums up to 27M$ wich is equivalent to the NCAV.  On today’s price of 6.45$, the total market capitalisation for GPIC is 52.9M$.  So the cash amounts for almost half of the company value.  A good security regarding downside protection.

On the goodwill side, there is nothing on balance sheet but you also get hard assets booked at 29M$ less depreciation.  Proprietary technologies like the RFID casino chips are not recorded on book but provides nice Margin of Security and barriers of entry. 

The cashflow statement shows a fairly stable cashflow from operation in the previous years at 8M average on 3 years equivalent to 15% of the company value.  This free cashflow does not include major swipes in accounts payable or receivables so it can be used to estimate future FCF.

The level of endebtness is very low with 14M$ of current liabilities and no long term debt.

Balance sheet is rock solid.


Trailing twelve month EPS is 0.53$ for a P/E of 12.  The 5 year average is 0.40 EPS.  Incomes and margins are mostly stable except for 2007 when revenues droped by 20% resulting in a crash of profits from 0.63 a share to 0.03.

I could not analyse revenues in a better way than FrankVoisin did.  You may read his analysis here and here.

Deeper analysis

Other great analysis can be found on Barel’s blog : Barel Karsan: Gaming Partners Cashes In.

Disclosure: None.

Posted in GPIC

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