Index removal puts Accel Entertainment back in focus

Accel Entertainment (ACEL) was recently removed from the Russell 2000 Dynamic Index, an event that can influence institutional ownership patterns, index tracking fund flows, and short term trading activity around the stock.

Against that backdrop, Accel Entertainment’s recent share price moves have been mixed, with a 1-day share price return of 1.27% but a 7-day share price return that declined 2.22%. Over longer periods, momentum has been steadier, with a 90-day share price return of 15.67% and a year-to-date share price return of 12.31%, while total shareholder returns of 6.15% over 1 year and 22.67% over 3 years point to a more gradual payoff for long term holders.

If the index change has you reassessing your watchlist, this can be a good moment to widen the net and check out 20 top founder-led companies

Accel Entertainment now trades at $12.77, with analysts pointing to a price target of $15.50 and some models suggesting a smaller intrinsic discount of about 6%. This raises the question of whether the stock is still undervalued, or if the market is already fully reflecting expectations for future growth.

Most Popular Narrative: 15.8% Undervalued

On the most widely followed narrative, Accel Entertainment’s fair value of $15.17 sits meaningfully above the last close at $12.77, which puts the recent index removal into a different light for valuation focused investors.

Expansion into new and developing markets such as Nebraska, Georgia, Louisiana, and continued optimization in Nevada positions Accel to capture incremental revenue growth as broader legalization and acceptance of gaming increases the total addressable market for distributed VGTs. This ongoing geographic diversification supports a sustained top-line revenue growth trajectory.

Curious what has to go right for that fair value to make sense? Revenue, earnings, and profit margins all play a part, along with a specific future P/E that anchors the whole narrative.

Result: Fair Value of $15.17 (UNDERVALUED)

However, the Accel Entertainment narrative also leans heavily on Illinois exposure and capital intensive expansion projects. Regulatory or execution setbacks could quickly challenge these assumptions.

Next Steps

Given the mix of optimism and concern around Accel Entertainment, it makes sense to look at the full picture for yourself and not just the headline story. If you want a concise snapshot of both the potential upside and the key watchpoints, start with the 4 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Accel Entertainment?

If Accel Entertainment has you thinking more broadly about your portfolio, now is the time to line up a few more candidates before the next big move passes by.

• Scan for potential value opportunities by checking companies that currently look cheap on quality and fundamentals using the 41 high quality undervalued stocks.
• Strengthen your income stream by reviewing stocks that offer higher yields and resilient payouts through the 8 dividend fortresses.
• Tighten your risk profile by focusing on companies with steadier financial characteristics using the 73 resilient stocks with low risk scores.

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.