I think there are a few reasons why the Crown Resorts Ltd (ASX: CWN) share price could be called a buy today.
Crown is well known as Australia's largest entertainment and casino complex business with its substantial properties in Melbourne and Perth. But there needs to be more to a business than simply the industry that it operates in to make it a buy.
So, here are three reasons why Crown could be a buy today:
Potential takeover target
Crown was a takeover target by Wynn Resorts, and then James Packer decided to sell 19.99% of Crown to Melco Resorts and Entertainment for $1.76 billion, or $13 a share.
There is a good chance that Melco and Lawrence Ho could decide to try to take over the entire business in the future, which you'd think would have to be at a sizeable premium to today's price.
There's no guarantee this will go ahead, but it shows potential for the current share price.
Crown Sydney
The completion of Crown Sydney is getting closer every month, which will hopefully create a good boost to Crown's earnings with it being based in Australia's richest city.
Right now Crown is outlaying significant money for construction and financing without the corresponding revenue boost, but when Crown Sydney is done it should result in a nice increase, although it's hard to say how much at this point. Management will be hoping it beats their base case.
Solid dividend
Crown continues to pay a dividend per share of $0.30 every six month, which is a solid partially franked dividend yield of 4.7%.
There are many ASX shares that have seen their share prices rise significantly after the interest rate cuts, which reduced the prospective dividend yield. Crown still offers a good dividend in my opinion.
Foolish takeaway
Crown is currently trading at 22x FY20's estimated earnings. It's certainly not cheap – a lot is riding on Crown Sydney being a success. I wouldn't mind owning some Crown shares at today's price, but I think there are better opportunities out there.
