Breaking Down Accel Entertainment, Inc. (ACEL) Financial Health: Key Insights for Investors

If you're looking at Accel Entertainment, Inc.'s (ACEL) financial health, the Q3 2025 numbers tell a compelling, if slightly complex, story about a distributed gaming leader executing its play. The headline is strong: the company reported Q3 revenue of $329.7 million, a solid 9.1% jump year-over-year, driven by its core markets in Illinois and Montana. But the real surprise was the bottom line, with net income surging 171.8% to $13.4 million, which translated to earnings per share (EPS) of $0.16 for the quarter. That kind of growth, plus ending the quarter with $290.2 million in cash and a new $900 million credit facility to extend debt maturities to 2030, defintely shows operational resilience and a focus on capital structure. Still, the stock's mixed short-term reaction suggests the market is weighing that strong revenue growth against broader industry volatility, so we need to dig into what's driving the adjusted EBITDA growth of 11.5% and what the analyst consensus of a Moderate Buy with a price target around $16.50 really means for your next move.

Revenue Analysis

You need to know where the money is actually coming from to gauge the quality of Accel Entertainment, Inc.'s (ACEL) growth, and the Q3 2025 numbers tell a clear story of a core business that is still expanding, plus a significant boost from new strategic plays. Total revenue for the third quarter of 2025 hit approximately $329.7 million, marking a strong year-over-year (YoY) increase of 9.1%. That's a solid top-line beat.

The vast majority of Accel Entertainment, Inc.'s income is what we call net gaming revenue, which is the money generated from their distributed gaming terminals (Video Gaming Terminals or VGTs) placed in bars, restaurants, and truck stops. Honestly, the business is a cash-flow machine built on these small-footprint locations. Here's the quick math on the Q3 2025 revenue breakdown:

• Net Gaming Revenue: $308.48 million
• ATM Fees and Other Income: $14.56 million
• Amusement Segment: $4.98 million
• Manufacturing Segment: $1.68 million

The core segment is doing the heavy lifting. The net gaming revenue alone accounts for over 93% of the total, so you're investing in a pure-play distributed gaming operator.

When you break down the revenue by region, the concentration risk becomes immediately visible, but so does the emerging opportunity. Illinois and Montana, the core markets, still represent roughly 82% of total revenue. Illinois, the largest market, grew 7% YoY to $239 million in Q3 2025, while Montana grew a more modest 2.1% to $40 million. That's a mature market strategy: optimize, don't just expand.

The real acceleration is happening in the developing markets, which is a key change in the revenue mix. This is where the strategic acquisitions and organic expansion are paying off. For example, in Q3 2025, Nebraska revenue surged 30% to $9 million, and Georgia revenue jumped an impressive 49.3% to $5 million. What this estimate hides, though, is that the 9.1% overall growth includes a significant contribution from the acquisitions of Toucan Gaming in Louisiana and the Fairmount Park Casino & Racing in Illinois, which commenced operations in April 2025. Without these new additions, the organic YoY revenue growth for Q3 2025 would have been a more modest 2.6%. Still, that strategic growth is defintely a necessary lever.

To be fair, not all regions are up. Nevada revenue actually declined 7.4% in the quarter due to the loss of a major customer last year. This highlights the risk of key customer churn in a distributed model. For a deeper dive into the investors driving these strategic moves, check out Exploring Accel Entertainment, Inc. (ACEL) Investor Profile: Who's Buying and Why?

Here's a snapshot of the Q3 2025 regional performance and its contribution to the overall picture:

Next step: Finance needs to model the organic versus inorganic growth contributions for the full 2025 fiscal year forecast by next Friday.

Profitability Metrics

When you look at Accel Entertainment, Inc. (ACEL), the core question is whether revenue growth translates to bottom-line profitability. The answer for the 2025 fiscal year is mixed: revenue is up, but net profitability is under pressure, signaling a classic growth-vs-margin trade-off.

For the first nine months of 2025, Accel Entertainment generated a total revenue of $989.5 million with a corresponding net income of $35.3 million. This translates to a nine-month Net Profit Margin of approximately 3.57%. However, the trailing twelve months (TTM) Net Profit Margin, which smooths out quarterly volatility, sits lower at 2.8%, a notable drop from 4.1% in the prior year. This highlights the near-term risk of margin compression despite robust top-line growth.

Gross and Operating Margin Trends

The Gross Profit Margin (GPM) is a crucial metric for Accel Entertainment, as it reflects the efficiency of their revenue-sharing model with their local business partners. The GPM has remained remarkably consistent, hovering around the 31.2% mark for the first three quarters of 2025 (Q1: 31.0%, Q2: 31.3%, Q3: 31.3%). This consistency shows that the core cost of goods sold-primarily the payouts and the location's share of net gaming revenue-is stable.

The Operating Profit Margin (OPM), which measures efficiency after accounting for selling, general, and administrative (SG&A) costs, is where you see the real operational leverage.

• Q1 2025 Operating Margin was approximately 8%.
• Q3 2025 Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $51.2 million on $329.7 million in revenue, resulting in an Adjusted EBITDA Margin of about 15.5%.

The gap between the Gross Margin (around 31%) and the Operating Margin (around 8%) is substantial, showing that the company's operating expenses are high. Here's the quick math: nearly three-quarters of the gross profit dollar is consumed by operating costs like route management, technology, and corporate overhead.

Comparative Profitability and Operational Efficiency

Accel Entertainment's profitability profile is unique due to its distributed gaming operator (DGO) model. The high Gross Profit Margin is immediately offset by the revenue-sharing structure. Still, when you benchmark it against the broader Consumer Discretionary sector, the comparison is stark.

The US Consumer Discretionary sector median Gross Profit Margin is closer to 35.7%. Accel Entertainment's GPM of around 31.2% is lower, which is expected given the required revenue split with location partners. This is simply the cost of doing business in this regulatory environment. The real opportunity, and the focus of management, is driving operational efficiency (cost management) below the gross profit line.

Management is defintely focused on operational execution, citing an 11.5% increase in Adjusted EBITDA in Q3 2025, driven by optimizing machine placements and route efficiencies, particularly in core markets like Illinois and Montana. The surge in Q3 2025 net income to $13.4 million (a 171.8% increase year-over-year) was significantly boosted by a non-core $2.2 million gain on contingent earnout shares, so you can't rely on that growth rate continuing.

The long-term goal, according to analyst consensus, is to see the Net Profit Margin climb from the current 2.8% to 7.2% in three years, which hinges on successful expansion into new, higher-margin markets and realizing scale efficiencies. If you want to understand the foundation of this strategy, you should review the company's long-term goals: Mission Statement, Vision, & Core Values of Accel Entertainment, Inc. (ACEL).

The clear action for you is to monitor the core, non-GAAP metric: Adjusted EBITDA Margin. If that 15.5% figure starts to slip, it means their cost management and location mix optimization efforts are failing to keep pace with expansion costs.

Debt vs. Equity Structure

You're looking at Accel Entertainment, Inc. (ACEL) and wondering how they fund their growth-is it through borrowing or shareholder money? The quick answer is: Accel Entertainment leans heavily on debt, which is typical for an acquisition-driven, capital-intensive gaming operator, but they manage it with strong cash flow.

As of the most recent data (Q3 2025), Accel Entertainment's debt profile shows a clear preference for leverage. The long-term debt, which is the bulk of their borrowing, was around $561.5 million earlier in 2025, with a smaller portion in short-term debt. However, with substantial cash on hand, their net debt-total debt minus cash-was a more manageable $305 million as of September 30, 2025.

Here's the quick math on their capital structure, which shows a high reliance on borrowing:

• Debt-to-Equity Ratio: The ratio stands at approximately 2.28 (or 228%) based on October 2025 figures.
• Industry Comparison: This is significantly higher than the average for the broader Consumer Discretionary sector, which sits closer to 35.6% for long-term debt to equity.

Honestly, that high ratio isn't a red flag by itself for a company like Accel Entertainment. They operate in a niche of distributed gaming, which requires significant upfront capital for new terminals and acquisitions like Toucan Gaming or the Fairmount Park Casino & Racing project. The key is their ability to service that debt, which their strong Adjusted EBITDA and free cash flow generation for 2025 suggests they can. You can see how they align their financial strength with their long-term goals in their Mission Statement, Vision, & Core Values of Accel Entertainment, Inc. (ACEL).

Speaking of debt, the company made a smart move in September 2025 by refinancing their existing debt. They closed a new $900 million senior secured credit facility, composed of a $300 million Revolving Credit Facility and a $600 million Term Loan. This action did two important things: it extended the maturity date for their debt out to 2030 and it lowered their overall cost of capital. That gives them a defintely solid foundation for continued investment in their growth pipeline.

Accel Entertainment balances this debt financing with equity funding mainly by using their equity as a secondary source for growth and for returning capital to shareholders. They use their strong cash flow to pay down debt, but they also repurchased 0.6 million shares of common stock for approximately $6.8 million in Q3 2025 alone, showing a commitment to both debt management and shareholder returns. It's a classic balancing act: use low-cost debt for big, immediate growth, and use operating cash flow to pay it down and reward investors.

Liquidity and Solvency

You're looking for a clear signal on whether Accel Entertainment, Inc. (ACEL) can comfortably cover its near-term obligations while still funding growth. The short answer is yes, they can. The company's liquidity position, as of the end of the third quarter of 2025, is defintely strong, primarily due to a high cash balance and a smart refinancing move that bought them significant breathing room.

The core health indicators, the current and quick ratios, tell the story immediately. Accel Entertainment's Current Ratio stood at a robust 2.64 for Q3 2025, and its Quick Ratio was nearly identical at 2.56. Since both of these are well above the 1.0 benchmark, it means the company holds more than twice the amount of current assets than current liabilities. That is a very comfortable cushion.

Here's the quick math: a high Quick Ratio means they can pay off almost all short-term debt even without selling off inventory, which, in their distributed gaming model, is mostly gaming terminals (a long-term asset, not a quick-sale item). They have plenty of readily available cash to meet obligations.

Working Capital and Cash Position

The working capital trend is positive, driven by a substantial cash hoard. Accel Entertainment ended Q3 2025 with $290.2 million in cash and cash equivalents. This significant cash balance is the engine behind the high liquidity ratios. What this estimate hides, however, is the operational necessity of that cash. The company's business model is capital-intensive, requiring constant investment in new gaming terminals and locations to maintain market share.

The firm is managing its working capital efficiently, keeping current assets liquid and minimizing the risk of a short-term cash crunch. This is a sign of disciplined financial management, but still, you must watch the leverage.

Cash Flow Statement Overview: Fueling Growth and Managing Debt

Analyzing the cash flow statement shows a company actively investing in its future while strategically managing its capital structure. In Q3 2025, the company generated $13.4 million in Net Income, which provides the baseline for cash flow from operations.

The two most important near-term actions, however, were on the investing and financing side:

• Investing Cash Flow: Capital expenditures (CapEx) totaled $21 million in Q3 2025, and $74 million year-to-date. This outflow is necessary for growth, specifically for new terminals and locations, and for the ongoing development of Fairmount Park Casino & Racing.
• Financing Cash Flow: Accel Entertainment closed a new $900 million senior secured credit facility, which extends debt maturities out to 2030. This move significantly enhances long-term stability and liquidity by providing $590 million in total liquidity (cash plus revolver availability). They also returned capital to shareholders, repurchasing $6.8 million of common stock in the quarter.

This refinancing is the clear strength here; it removes the near-term refinancing risk that often plagues growing companies, giving management a solid five-year runway to execute their expansion plans. You can read more about the full financial picture in Breaking Down Accel Entertainment, Inc. (ACEL) Financial Health: Key Insights for Investors.

Liquidity Concerns and Strengths

Accel Entertainment's liquidity is robust, but its solvency (the ability to meet long-term obligations) still requires attention. The $305 million in net debt at the end of Q3 2025 is manageable, especially with the new credit facility. However, the Debt-to-Equity ratio of 2.29 indicates a significant reliance on debt financing. This leverage is typical for an acquisition-driven, capital-intensive business, but it means any future operational downturn could quickly pressure the balance sheet.

The strength is the sheer amount of cash and the extended debt maturity profile. The risk is the structural leverage. Still, the liquidity ratios show they are in no danger of missing a payment anytime soon.

Valuation Analysis

You're looking for a clear signal on Accel Entertainment, Inc. (ACEL), and the data suggests a compelling story: the stock appears undervalued based on consensus targets, but its valuation ratios point to the market pricing in significant future growth. The key takeaway is that the average analyst price target of $15.50 implies an upside of over 50% from the recent trading price of around $10.27 as of November 2025.

This is a classic growth-stock valuation scenario. Accel Entertainment operates in a fragmented, regulated market, and its valuation metrics reflect both the stability of its cash flow and the expectation of continued expansion into new states, plus the ramp-up of its recent Fairmount Park acquisition.

Is Accel Entertainment Overvalued or Undervalued?

Accel Entertainment's valuation ratios are mixed, suggesting it's trading below its potential but not necessarily a deep-value play. Its forward-looking Price-to-Earnings (P/E) ratio is a key indicator here, sitting at about 10.40 for the 2025 fiscal year. This is significantly lower than its trailing P/E of 20.52, which tells me the market expects a substantial jump in earnings per share (EPS) in the near term. For a growth-oriented gaming company, a forward P/E in the low teens is defintely attractive.

When you look at its Enterprise Value-to-EBITDA (EV/EBITDA), a crucial metric for capital-intensive businesses like gaming, Accel Entertainment trades at 6.54. This is a reasonable multiple, especially when compared to the broader gaming sector, suggesting the company is not wildly overleveraged or overvalued on an operating basis. The Price-to-Book (P/B) ratio is about 3.22, which is higher than one, but that's typical for a business model that relies on high-return assets and strong cash flow, not just tangible book value.

• Trailing P/E: 20.52
• Forward P/E: 10.40
• P/B Ratio: 3.22
• EV/EBITDA: 6.54

Stock Performance and Analyst Consensus

The stock price trend over the last 12 months shows volatility, with a 52-week range between a low of $9.02 and a high of $13.27. Trading near the lower end of that range, at approximately $10.27 in November 2025, it's clear the stock has seen some pressure, possibly due to broader market sentiment or recent EPS misses, even with record revenue. The market is still figuring out the full impact of the Fairmount Park and Louisiana acquisitions.

Despite the recent stock dip, Wall Street analysts maintain a consensus rating of Moderate Buy. The average 12-month price target is $15.50, with some targets reaching $16.00. Here's the quick math: reaching the $15.50 target would mean a gain of over 50% from the current price, which is a significant potential return. This optimism is largely tied to the company's strong organic growth in core markets like Illinois and Montana, plus the long-term free cash flow generation expected after major capital expenditures (CapEx) normalize.

Dividends and Shareholder Return

Accel Entertainment does not currently pay a common stock dividend. So, don't expect a dividend yield or payout ratio to factor into your income strategy here. Instead, the company focuses on returning capital through an active share repurchase program. Since November 2021, Accel Entertainment has repurchased $167 million of its common stock, including $7 million in Q3 2025 alone. This strategy prioritizes reducing share count and boosting EPS-a common move for growth companies with high free cash flow.

If you want a deeper dive into the company's long-term strategic direction, you should review its Mission Statement, Vision, & Core Values of Accel Entertainment, Inc. (ACEL).

Next Step: Review the Q3 2025 earnings call transcript to understand management's commentary on the forward P/E of 10.40 and the timeline for CapEx normalization.

Risk Factors

You're looking at Accel Entertainment, Inc. (ACEL)'s growth, and the headline numbers from Q3 2025-like the 9.1% jump in revenue to $329.7 million-look great. But as a seasoned analyst, I focus on what's under the hood. The core risk for Accel Entertainment, Inc. is a simple one: geographic concentration married to a hyper-regulated industry. This is a double-edged sword that magnifies both regulatory and economic threats.

The company's revenue engine is still heavily reliant on just two markets: Illinois and Montana, which account for roughly 82% of the total. This thin-skin exposure means any adverse regulatory change or localized economic downturn in those states could disproportionately impact the entire financial model. We saw a similar dynamic play out in the past with legislative shifts; it's a constant, low-grade fever in this sector. Honestly, you can't diversify away from political risk entirely, but you can spread the risk.

The gaming industry is a regulatory minefield, and Accel Entertainment, Inc. faces constant scrutiny. The risk isn't just new laws, but also new interpretations of existing ones, which can limit operations or trigger fines. Plus, there are persistent, organized efforts to curtail the expansion of legalized gaming, which could slam the door on future growth markets. This is the cost of doing business in distributed gaming (gaming terminals in non-casino locations like bars and truck stops).

Operationally, the company is still dependent on key manufacturers for its gaming terminals and related supplies. A disruption here-a supply chain bottleneck or a contract issue-could slow their ability to capitalize on new location opportunities. Also, their aggressive push into new, less-familiar territory, such as the casino and horse racing operations at Fairmount Park, introduces execution risk and material operating costs due to their limited experience in those specific areas.

Here's the quick math on some key financial and strategic risks from the 2025 fiscal year:

To mitigate these risks, Accel Entertainment, Inc. is taking clear actions. The strategic focus is on diversification and financial flexibility. Their expansion into Louisiana, Nebraska, and Georgia is a direct countermeasure to the Illinois/Montana concentration. They are also optimizing their balance sheet, securing a new $900 million credit facility that extends debt maturities to 2030 and provides $590 million in liquidity. That's a defintely smart move to shore up their foundation.

The mitigation strategy boils down to a few core actions:

• Scale up new markets like Georgia and Louisiana to dilute concentration risk.
• Optimize the core Illinois market by closing underperforming locations.
• Use the new credit facility to manage interest rate exposure and fund growth.
• Return capital to shareholders, repurchasing $16.9 million of stock through H1 2025.

What this estimate hides is the potential for a new jurisdiction to open up, which would be a massive, immediate opportunity. For a deeper dive into the company's long-term philosophy, you can review the Mission Statement, Vision, & Core Values of Accel Entertainment, Inc. (ACEL).

Next Step: Portfolio Manager: Model the impact of a 15% revenue decline in Illinois on 2026 Adjusted EBITDA by the end of the week.

Growth Opportunities

You're looking at Accel Entertainment, Inc. (ACEL) and wondering where the next dollar of growth comes from, especially after a solid Q3 2025. The direct takeaway is that the company is executing a dual strategy: optimizing its core, cash-rich markets while aggressively scaling in new, high-growth states and expanding into a new asset class-the racino (a racetrack and casino hybrid).

This isn't just about adding more video gaming terminals (VGTs); it's about strategic diversification. The full year 2025 revenue is projected to be around $1.31 billion, with earnings per share (EPS) estimated at $0.58, showing a defintely stable, growing core business. Here's the quick math: the Q3 2025 revenue of $329.7 million, a 9.1% year-over-year increase, was driven by this focused expansion.

Accel Entertainment's future growth is mapped to three clear drivers that move beyond its foundational Illinois market, which still holds a dominant ~28% terminal share.

• Geographic Expansion: Scaling operations in developing markets like Nebraska and Georgia, which saw revenue growth of 30% and 49%, respectively, in Q3 2025. Plus, the late 2024 acquisition of Toucan Gaming in Louisiana is expected to contribute approximately $25 million in revenue and $6 million in Adjusted EBITDA in 2025.
• New Asset Class: The opening of the Fairmount Park Casino & Racing in Illinois in April 2025, which marks the company's entry into casino operations and horse racing. This new venue, which includes a FanDuel sports betting partnership, is a significant investment, with the company forecasting a total 2025 capital expenditure (CapEx) of $75 million to $80 million.
• Product Innovation: Rolling out Ticket-In, Ticket-Out (TITO) functionality across its VGT network and introducing the Bulldog Wallet, a digital payment option for skill-based amusement machines in Georgia. These improvements enhance the player experience and operational efficiency, which helps to mitigate the impact of rising costs.

To be fair, the company's competitive advantage is its scale and its resilient, high-margin distributed gaming model (VGTs in local businesses), which is a niche too small for major casino giants. This scale gives them purchasing power and route optimization advantages. They also have the financial flexibility to continue this growth, having closed a new $900 million credit facility in 2025, extending their debt maturities to 2030 and providing $590 million in liquidity for M&A and CapEx. The strategy is simple: dominate the local gaming segment. You can see how this all connects back to the core principles of the organization in their Mission Statement, Vision, & Core Values of Accel Entertainment, Inc. (ACEL).

The table below summarizes the core financial estimates and the primary growth levers for the near term.

What this estimate hides is the inherent concentration risk; Illinois and Montana still account for about 82% of total revenue, so any adverse regulatory change there could still hit hard. Still, the disciplined approach to M&A and the focus on operational efficiency in core markets-like actively culling the bottom 10% of underperforming locations-shows a management team focused on margin quality, not just top-line growth.

Next step: Track the ramp-up of the Fairmount Park Casino & Racing in the Q4 2025 earnings report for early indications of its revenue contribution.