If you are looking at Accel Entertainment and wondering whether the current price reflects its true worth, you are in the right place to unpack what the market might be implying about the stock.
The shares most recently closed at US$11.70, with returns of 3.0% over 7 days, 3.7% over 30 days, 2.9% year to date, 15.4% over 1 year, 32.2% over 3 years, and a 4.2% decline over 5 years. Taken together, these figures give you a mixed picture of how sentiment has shifted over different time frames.
Recent news coverage has focused on Accel Entertainment’s position within the broader consumer services space and how its business model fits into long term gaming and amusement trends. This helps frame those return figures in context. Commentary has also highlighted how investors are weighing the company’s operating profile against other listed peers in the same industry.
On Simply Wall St’s valuation checks, Accel Entertainment scores 2 out of 6. Below, we walk through what different valuation methods say about that score and then finish with a more holistic way to think about what the stock might be worth.
Accel Entertainment scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
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A Discounted Cash Flow, or DCF, model takes projected future cash flows and discounts them back to today using a required rate of return. The idea is to estimate what those future dollars are worth in present terms.
For Accel Entertainment, the model uses Free Cash Flow to Equity. The latest twelve month free cash flow is about $57.7 million, and analysts have supplied forecasts that are then extended by Simply Wall St out to ten years. Within those projections, forecast free cash flow for 2027 is $80.1 million, with further values through to 2035 calculated using the same 2 Stage Free Cash Flow to Equity framework.
Pulling all of those discounted cash flows together, the DCF model arrives at an estimated intrinsic value of about $10.87 per share, compared with the recent share price of $11.70. That implies the shares are around 7.6% above this particular estimate of fair value, which is a relatively small gap rather than a glaring mismatch.
Result: ABOUT RIGHT
Accel Entertainment is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
For profitable companies, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of earnings. It links the share price directly to the bottom line, which tends to be what ultimately matters for equity holders.
What counts as a “normal” P/E depends on what investors expect from a company. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while slower expected growth or higher risk can point to a lower P/E being more appropriate.
Accel Entertainment currently trades on a P/E of 18.54x. That sits below the Hospitality industry average of about 22.13x, but above the peer group average of 12.70x. Simply Wall St also calculates a proprietary “Fair Ratio” of 18.03x, which is the P/E it would expect for Accel Entertainment given factors like its earnings profile, margins, industry, market cap and risk characteristics.
The Fair Ratio aims to be more tailored than a simple comparison with peers or the wider industry, because it adjusts for company specific traits rather than assuming one size fits all. With the current P/E only slightly above the 18.03x Fair Ratio, the multiple looks broadly aligned with this framework.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories you create about Accel Entertainment that tie your view of its business, future revenue, earnings and margins to a financial forecast. They produce a fair value and then compare that fair value with the current price using an easy tool on Simply Wall St’s Community page that updates automatically when news or earnings arrive. Narratives can reflect very different opinions, such as one investor expecting fair value around US$15.17 based on the bullish coverage and leadership transition, while another uses more cautious assumptions and arrives at a materially lower figure. This gives each of them a clear, numbers based story to guide their own decision on whether the current price looks attractive or not.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
