Star Entertainment shares sink 6% despite positive EBITDA

The December quarter delivered a sharp swing from prior quarterly losses but comes with caveats.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Star Entertainment Group Ltd (ASX: SGR) share price is down around 6% at the time of writing despite the embattled casino operator reporting a return to positive quarterly EBITDA, and offering investors a rare sign of progress after a prolonged period of losses, regulatory pressure, and balance sheet strain.

The December quarter delivered a sharp swing from losses, helped by stronger trading at its Gold Coast property and a higher operator fee from the Brisbane property.

A gambler at a casino bets a pile of chips on one number.

Image source: Getty Images

What did Star Entertainment report?

For the three months ended 31 December 2025 (Q2 FY26), Star reported revenue of $301 million, up 6% on the previous quarter, and positive group EBITDA of $6 million, compared with an EBITDA loss of $13 million in Q1.

That is welcome news, but there is a notable caveat because all the EBITDA figures disclosed are before adjusting for significant items, which will be detailed separately when the company releases its half-year results.

The results reflected varied performance levels across the group's properties. The Gold Coast property delivered EBITDA of $10 million, benefiting from seasonally stronger gaming and hospitality volumes. Star Brisbane posted EBITDA of $4 million, driven by operator fee revenue under its casino management agreement, including a one-off true-up related to earlier periods.

By contrast, The Star Sydney remained loss-making, with negative EBITDA of $8 million, reflecting the ongoing impact of mandatory carded play and cash limits in NSW. Management noted that while trading in Sydney has stabilised, revenue levels remain well below historical levels.

What else do investors need to know?

While the return to positive EBITDA is encouraging, it does not signal a clean recovery. Operating conditions remain challenging across all properties due to tighter regulations and ongoing compliance requirements.

Liquidity is also a key issue. Star reported available cash of $130 million at the end of December, but management reiterated that the company's ability to continue as a going concern depends on resolving several material uncertainties. These include refinancing discussions with lenders ahead of upcoming covenant testing, and the timing and quantum of the still-pending AUSTRAC judgment.

The company is currently engaging with existing and potential lenders on a refinancing process, though it cautioned there is no certainty around the outcome or timing.

What comes next?

Star said significant items will be disclosed when it releases its half-year results, which will provide a clearer picture of its underlying profitability and balance sheet position.

Investors will also be watching for updates on refinancing, regulatory outcomes, and whether EBITDA improvements can be sustained beyond seasonal factors.

Foolish bottom line

Returning to positive quarterly EBITDA is an important milestone for Star Entertainment, but the result comes before significant items, and major risks remain around regulation, funding, and compliance. That could be part of the reason why shares are sinking lower today.

Another potential reason could be investors simply taking some recent gains off the table, as Star Entertainment shares had risen 33% over the last year prior to today's announcement.

For investors, this quarter looks more like a step away from the brink than a full turnaround. The half-year results will be critical in determining whether Star is genuinely stabilising or simply enjoying a temporary reprieve.

Motley Fool contributor Kevin Gandiya has no positions in any of the stocks mentioned.  The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Three women laughing and enjoying their gambling winnings while sitting at a poker machine.
Consumer Staples & Discretionary Shares

How high does Macquarie think this gaming stock will go?

Profit is expected to build throughout the year.

Read more »

Stressed shopper holding shopping bags.
Consumer Staples & Discretionary Shares

3 brokers weigh in on how high Premier Investments shares could go

A strategic reset of the business could have it primed for growth.

Read more »

Image of a shopping centre.
Consumer Staples & Discretionary Shares

A $500 million deal just dropped for Woolworths. Here's what investors need to know

Woolworths sells $500 million in shopping centres to unlock capital.

Read more »

A wine technician in overalls holds a glass of red wine up to the light and studies it.
52-Week Lows

Treasury Wine shares just tumbled to 14-year lows. Screaming bargain or falling knife?

Trading at 14-year lows, are Treasury Wine shares poised for a rebound?

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Consumer Staples & Discretionary Shares

A rare buying opportunity for this ASX 200 stock as it rebounds from a historic low

Analysts are expecting big things from this beaten-down ASX 200 stock.

Read more »

One girl leapfrogs over her friend's back.
Growth Shares

This dirt cheap ASX retail stock is tipped to double in value

Better execution and easing pressures could spark a powerful rebound.

Read more »

Stressed shopper holding shopping bags.
Consumer Staples & Discretionary Shares

Which ASX retail stock could soar more than 100% if this broker is right?

A solid first half result has set this business up to win.

Read more »

A man on a phone call points his finger, indicating a halt in trading on the ASX share market.
Consumer Staples & Discretionary Shares

Trading halt, delayed results, and a capital raise: Why this ASX retail stock is under pressure

KMD shares fall after an earnings delay and equity raise announcement.

Read more »