Slot machine and terminal operator Accel Entertainment (NYSE:ACEL) reported revenue ahead of Wall Street’s expectations in Q3 2026, with revenue up 10.3% year on year to $363.6 million. Its GAAP profit of $0.25 per share was 39.4% above analysts’ consensus estimates.
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Accel Entertainment (ACEL) Q3 2026 highlights:
- Revenue $363.6 million vs S&P analysts’ consensus estimates of $358.4 million (10.3% year-on-year growth, 1.4% beat)
- EPS (GAAP) $0.25 vs analysts’ consensus estimates of $0.18 (39.4% beat)
- Adjusted EBITDA $57.48 million vs analysts’ consensus estimates of $55.36 million (15.8% margin, 3.8% beat)
- Operating margin 7.9%, in line with the same quarter last year
- Free cash flow margin 21.8%, up from 10.4% in the same quarter last year
- Video gaming terminals sold increased by 1,834 year on year
- Market capitalization $967 million
“Finally, we recently completed the build-out of our senior leadership team to execute against the growth opportunities that we see ahead of us, including Chicago, where the rollout has now begun with the receipt of our first licenses, and the continued development of Fairmount. We are very excited about Accel’s future and remain focused on executing initiatives that we believe can enhance long-term shareholder value.”
Revenue growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Accel Entertainment grew its revenue at an 18.2% annual rate. Though this growth is acceptable on an absolute basis, revenue growth alone is not enough for the consumer discretionary sector, which can display significant earnings volatility. The bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, the five-year compound annual growth rate covers a period starting around Covid, when revenue was depressed before rebounding.
Long-term growth matters most, but within consumer discretionary, a longer historical view may miss a company riding a successful new product or trend. Accel Entertainment’s recent performance shows its demand has slowed as its annualized revenue growth of 8.5% over the last two years was below its five-year trend. Decelerating revenue growth in the sector warrants caution, as it could signal changing consumer tastes aided by low switching costs. 
The company’s number of video gaming terminals sold, which reached 29,548 in the latest quarter, offers insight into its revenue dynamics. Over the last two years, Accel Entertainment’s video gaming terminals sold averaged 6.3% year-on-year growth. Revenue growth outpaced this metric during the same period, indicating that the company’s monetization has risen. 
This quarter, Accel Entertainment reported year-on-year revenue growth of 10.3%, and its $363.6 million of revenue exceeded Wall Street’s consensus estimates by 1.4%.
Looking ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, according to S&P, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges.
Operating margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses, from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Accel Entertainment’s operating margin has generally stayed the same over the last 12 months, falling short of the margin increases typically expected from economies of scale and cost efficiency over time.
This quarter, Accel Entertainment generated an operating margin of 7.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings per share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Accel Entertainment’s EPS grew at a 35.3% compounded annual growth rate over the last five years, higher than its 18.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.
In Q3, Accel Entertainment reported EPS of $0.25, up from $0.16 in the same quarter last year. EPS comfortably beat analysts’ consensus estimates. Over the next 12 months, Wall Street expects Accel Entertainment’s full-year EPS to grow 12.2% from $0.76 to $0.86, according to S&P.
Key takeaways from Accel Entertainment’s Q3 results
Accel Entertainment’s Q3 revenue narrowly topped Wall Street’s consensus estimates, and EPS also beat expectations, making for a solid quarter with key metrics ahead of forecasts. Shares rose 2.3% to $12.17 immediately after the release.
Accel Entertainment reported solid earnings, but one quarter doesn’t necessarily make the stock a buy. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation when deciding whether to invest in this stock. Read more in our full research report here (it’s free).