Monarch Casino & Resort, Inc. (MCRI) Q3 2026 earnings review
Monarch restarts share buybacks, but hotel revenue growth stalls
Monarch Casino & Resort, which operates casino hotels in Reno and Colorado, saw revenue growth cool while restarting share buybacks. Chief executive John Farahi highlighted record revenue and cash profit, as casino gaming grew 3% and restaurant margins improved. However, hotel revenue rose barely 1% once the Reno property passed the anniversary of its 2025 room renovation.
| Net revenue | $146.3M +2.4% from a year ago |
|---|---|
| Hotel revenue growth | +0.9% +13.0% last quarter |
| Diluted profit per share | $1.76 +4.1% from a year ago |
| Annual dividend plan | Unchanged $1.20 per share ($0.30 quarterly) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because slower growth after the renovation lap was expected, and resuming buybacks offsets the quieter top line. After buying no shares in the second quarter, the company spent $37 million to retire 3% of its share count from a year ago. One caution: higher overhead costs and taxes held net income growth to 1%.
The question now is how Monarch will use its $137 million cash pile once the Colorado contractor appeal ends. Either the company buys another casino property or it keeps returning cash through buybacks and its Reno land parcel. A ruling from the appeals court and year-end convention deposit numbers will settle the direction.
🐂 Bull Case
Monarch Resumed Buybacks With $37 Million
Monarch Casino & Resort, which runs casino hotels in Reno, Nevada and Black Hawk, Colorado, paused its share buybacks during the second quarter. In the third quarter, the casino operator returned to the open market and spent $37 million to retire 300,859 shares, paying about $123 per share by our math.
Combined with $5.3 million in cash dividends, the Reno-based group returned $42.3 million to shareholders in three months and funded all of it from operating cash flow. Retiring those shares reduced the diluted share count by 3.1% from a year ago. Because the share count shrank, profit per share rose 4.1% even though net income grew 1.4%.
What to watch: share repurchases in the fourth quarter, where 670,644 shares remain under the current board authorization. Buying at this pace would exhaust the remaining authorization within a year and keep profit per share growing faster than net income.
Casino and Hotel Departments Held Their Margins
Even as revenue growth slowed across the resort properties, Monarch kept day-to-day operating costs in check across all three operating departments. Food and beverage costs had risen faster than sales in the second quarter, raising concern about wage and ingredient inflation, but the restaurant business reversed that pressure this quarter.
- Food and beverage operating expense: 69.6% of department revenue, down from 69.9% a year ago and 72.9% last quarter
- Hotel operating expense: 31.3% of hotel revenue, down from 31.4% a year ago
- Casino operating expense: unchanged at 35.8% of casino revenue
- Consolidated Adjusted EBITDA margin (profit before interest, taxes, depreciation and one-offs as a share of revenue): 38.3%, down 0.1 percentage points from a year ago by our math
The company credited the restaurant improvement to "an increase in revenue per cover", meaning guests spent more per meal. Hotel margins benefited from "an increase in Average Daily Rate and a decrease in operating expenses per occupied room".
What to watch: the food and beverage expense ratio in the fourth quarter. Holding that ratio near 70% during the slower winter months would confirm that menu pricing is offsetting kitchen labor costs.
🐻 Bear Case
Hotel Growth Stopped After Passing Renovation
"In the third quarter of 2026, Monarch delivered record quarterly net revenue and adjusted EBITDA," chief executive John Farahi said, pointing to growth across the casino, restaurant, and hotel segments. In the first half of the year, hotel revenue jumped 13% from a year ago because the Reno property was comparing against months when rooms were closed for renovation.
Monarch finished that room renovation in May 2025, so the third quarter was the first clean comparison with all rooms open in both periods. With the easy comparison gone, hotel revenue rose 0.9% from a year ago to $22.7 million, and food and beverage sales grew 1.3%. Total revenue growth slowed to 2.4%, down from 4.2% in the second quarter and 8.9% in the first.
What to watch: customer advances and deposits in the annual report's contract-liability note. A flat or falling deposit balance at year-end would show that convention and group bookings cannot lift hotel growth back above low-single digits.
Tax and Overhead Costs Slowed Profit Growth
In the first half of 2026, Monarch grew net income by more than 20% even on modest sales growth. That profit jump came from two items below the property level: depreciation expense fell after the Black Hawk hotel tower finished depreciating late last year, and option exercises created a tax benefit in the second quarter.
In the third quarter, depreciation still fell to 7.4% of revenue from 9.8% a year ago by our math. However, selling, general and administrative expense (corporate overhead and marketing) rose 0.5 percentage points to 19.8% of revenue on "an increase in legal and employee related expenses". Meanwhile, the effective tax rate climbed to 24.0% from 18.5% a year ago by our math, leaving net income up 1.4%.
What to watch: first-quarter 2027 depreciation and net income. Because the lower depreciation expense started in the first quarter of 2026, that accounting tailwind disappears in early 2027, leaving profit growth reliant on operating earnings.
Contractor Dispute and Deal Hunt Add Costs
Monarch is appealing a $74.6 million court judgment won by PCL Construction Services, the general contractor on its Black Hawk expansion. While the appeal continues, the unpaid judgment accrues interest every quarter. In the third quarter, the casino operator recorded $1.13 million for the judgment accrual and $152 thousand in construction legal fees, bringing nine-month dispute charges to $4.28 million.
At the same time, the company repeated for a fourth straight quarter that it continues to "diligently evaluate potential M&A transactions" while holding $137.4 million in cash. Supporters view that cash pile as valuable flexibility for an acquisition, but holding it while shopping for a third casino leaves investors exposed to both the courtroom bill and the risk of overpaying for a deal.
What to watch: the Colorado Court of Appeals ruling on the PCL judgment, following oral arguments held in September 2026. An unfavorable decision would require Monarch to pay the judgment and accrued interest from its cash balance.
Risks this quarter didn't answer
Three standing concerns from prior quarters received little or no detail in the third-quarter earnings release because the company reports property-level and footnote details only in its quarterly filing.
- Reno and Black Hawk competition: casino revenue rose 3.4% overall, but the release does not separate Reno results facing California tribal casinos from Colorado results; the quarterly filing commentary will give qualitative detail.
- Online gaming opposition: Monarch spent $5 thousand in the quarter ($181 thousand over nine months) lobbying against online casino expansion; state legislative sessions in 2027 are the next test.
- Related-party parking lease: payments to an entity affiliated with the founding family live in the quarterly filing's footnote on related-party transactions.
👓 Other Themes
Monarch Bought Land Next to Its Reno Resort
Capital expenditures rose to $9.7 million in the third quarter, up from $5.0 million in the second quarter and $5.4 million a year ago. Alongside regular maintenance and new gaming machines at both resorts, Monarch used the cash for the "purchase of land with a building adjacent to Atlantis" in Reno, without disclosing the purchase price or development plans for the parcel.
💲 Other KPIs
Operating profit rose 8.1% from a year ago, slowing from 10.7% growth in the second quarter and 38.0% in the first. Operating margin reached 28.2% of revenue, up 1.5 percentage points from 26.7% a year ago by our math, because lower depreciation expense outweighed higher corporate overhead.
Cash on hand dipped 0.6% from $138.3 million at the end of the second quarter, as $37.0 million of share buybacks, $9.7 million of capital spending, and $5.3 million of dividends used up the quarter's cash flow. Compared with a year ago, cash is up 27.7% by our math, with zero debt drawn on the credit facility.
Amounts owed by customers fell from $9.6 million in the second quarter and $11.1 million at the end of 2025. Compared with a year ago, receivables rose 1.6% by our math, growing slower than the 2.4% increase in net revenue.
🔮 Guidance
Unchanged. Monarch declared a $0.30 per share cash dividend for the fourth quarter, payable on December 15, keeping its annual payout at $1.20 per share. The resort operator does not issue revenue or profit forecasts, and it has held this quarterly payout rate steady every quarter across the past year.
❓ Key Questions
What did Monarch pay for the land next to Atlantis?
Third-quarter capital spending jumped to $9.7 million and included buying land with a building adjacent to the Reno resort. Investors need to know the price paid and whether management plans a hotel or casino expansion on the site.
Did advance room and convention deposits grow in the quarter?
Hotel revenue growth dropped from 13.0% in the second quarter to 0.9% in the third. The contract-liability table in the quarterly filing will show whether advance deposits from group bookings are rising or flat heading into 2027.
Why did corporate overhead expenses rise faster than sales?
Selling, general and administrative costs rose 5.4% from a year ago to $29.0 million, taking 19.8% of revenue. Management cited legal and employee expenses, which are separate from the construction litigation line, without sizing either item.
What is the status of the PCL court appeal?
Oral arguments in the appeal of the $74.6 million construction judgment were scheduled for September 2026. The company accrued another $1.13 million of judgment interest this quarter and gave no timeline for a court decision.