We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Gambling Stock Roundup: WYNN, MGM & Other Q1 Earnings in Focus; Macau Sales Rise in April
Read MoreHide Full Article
Last week was a big one for the gambling industry, as major casino operators reported their first-quarter 2017 earnings.
While players like Wynn Resorts Ltd. (WYNN - Free Report) , MGM Resorts International (MGM - Free Report) and Penn National Gaming Inc. (PENN - Free Report) reported better-than-expected results, Las Vegas Sands Corp. (LVS - Free Report) and Monarch Casino & Resort Inc. (MCRI - Free Report) posted mixed results.
Though Las Vegas Sands’ earnings beat the Zacks Consensus Estimate, revenues missed the mark. Meanwhile, Monarch Casino & Resort failed to beat bottom-line expectations while its top line surpassed.
On the other hand, Churchill Downs Inc. (CHDN - Free Report) lagged on both fronts.
Additionally, Macau's gaming revenues rose for the ninth consecutive month in April. This signals that the casino hub is firmly on its path to recovery from the two-year slump stemming from China's anti-graft corruption drive and slow economic growth.
Moreover, the Nevada Gaming Control Board announced an increase in revenues in the region in March.
1. Wynn Resorts posted earnings of $1.24 per share in the fourth quarter, beating the Zacks Consensus Estimate of 74 cents by 67.6%. Further, this Zacks Rank #1 (Strong Buy) company’s earnings increased 15.9% from the year-ago figure of $1.07 mainly due to higher revenues. You can see the complete list of today’s Zacks #1 Rank stocks here.
Net revenue of $1.48 billion surpassed the Zacks Consensus Estimate of $1.34 billion by 10.4%. Moreover, revenues increased 47.9% on the back of higher revenues from Wynn Palace along with favorable performance by the company’s Las Vegas Operations, partly offset by lower revenues from Wynn Macau.
Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 42.4% year over year to $427.5 million on higher revenues from Wynn Palace and its Las Vegas Operations (read more: Wynn Resorts Q1 Earnings & Revenues Top, Stock Up).
2. MGM Resorts posted first-quarter 2017 adjusted earnings of 38 cents per share which came below the Zacks Consensus Estimate of 26 cents by 46.2%. Moreover, earnings were significantly above the year-ago quarter figure on account of higher revenues.
Additionally, this Zacks Rank #3 (Hold) company’s total revenue of $2.71 billion beat the Zacks Consensus Estimate of $2.61 billion by nearly 4% and jumped 22.6% year over year. The upside reflects a significant increase in revenues from the company’s Las Vegas operations and MGM China as well.
Adjusted property EBITDA at MGM Resorts’ wholly owned domestic resorts was $648 million, up 34% year over year. The Profit Growth Plan that commenced in Jul 2015 continues to bear fruit and is being reflected in improving profits (read more: MGM Resorts Stock Rises on Q1 Earnings & Revenue Beat).
3. Las Vegas Sands’ fourth-quarter earnings of 66 cents surpassed the Zacks Consensus Estimate of 62 cents by nearly 6.5% and jumped 40.4% year over year owing to higher revenues.
Quarterly net revenues of $3.11 billion came slightly below the Zacks Consensus Estimate of $3.12 billion but increased 14.3% year over year primarily on the back of solid performance at its Las Vegas properties, somewhat offset by mostly weak results in Macao. On a consolidated basis, adjusted property EBITDA increased 24.9% year over year to $1.15 billion during the quarter owing to higher revenues (read more: Las Vegas Sands Earnings Beat, Revenues Miss in Q1).
This Zacks Rank #3 company stated that its industry-leading Cotai Strip property portfolio in Macao experienced strong visitation and higher hotel occupancy rates buoyed by the addition of The Parisian Macao.
4. Per the Macau Gaming Inspection and Coordination Bureau, gross gaming revenues for April rose 16.3% on a yearly basis to roughly $2.52 billion or 20.2 billion patacas.
Looking back, a tough operating environment in Macau has been weighing on casino stocks since Jun 2014 to the most part of 2016. The crackdown on corruption in China compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau.
Consequently, this lowered footfall at local casinos. A slowdown in China, tighter visa policies, political unrest and a smoking ban on mass market gaming floors compounded the woes.
However, Macau's gambling revenues have been rising since second-half 2016 with new resorts attracting high rollers as well as leisure gamblers.
Efforts undertaken by Macau operators to revive revenues by wooing tourists and recreational gamblers with family-friendly resorts and more non-gaming facilities have started yielding results. This is evident from revenue growth in the past nine months.
Though concerns related to the sustainability of revenues from the VIP market linger, it seems that the worst is over for Macau’s gambling industry.
Still, a complete rebound in the region will take time as evident from the general weakness in casino operators’ performance in Macau in Q1.
5. According to the Nevada Gaming Control Board, gambling revenues in the state increased nearly 7.5% in Mar 2017 from the year-ago period to $991 million. More specifically, casino revenues in the Las Vegas Strip – which account for more than half of Nevada’s total revenue – were up 8.1% year over year in the month. Reno, too, recorded an 8.1% rise in casino revenues.
Notably, revenues in the region have been pretty patchy over the past few months. After the slump in November and December, revenues were solid in January. However, revenues again faltered in February before returning to growth in March.
Price Performance
The following table shows the price movement of the major gambling stocks over the past week and the last six months:
Company
Last Week
Last 6 Months
WYNN
6.4%
30.1 %
LVS
2.3%
1.9%
MGM
5.9%
17.4%
PENN
-1%
42.9%
MCRI
0.2%
24.6%
CACQ
10.1%
49.8%
BYD
0.7%
27%
Over the last five trading sessions, share price movement of the major gambling stocks was mostly encouraging. Caesars Acquisition Company gained the maximum of 10.1% followed by Wynn Resorts and MGM Resorts’ rise of 6.4% and 5.9%, respectively. However, Penn National Gaming lost 1%.
Moreover, over the last six months, the price performance of gambling stocks was positive. Among the stocks that appreciated the most were Caesars Acquisition Company and Penn National Gaming that gained 49.8% and 42.9%, respectively. Wynn Resorts too recorded a gain of 30.1% over the same time frame.
What’s Next in the Gambling Space?
We note that gambling stocks have oscillated between gains and losses in recent sessions and with the earnings season in full swing, investors can expect this volatility to continue in the coming days.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Image: Bigstock
Gambling Stock Roundup: WYNN, MGM & Other Q1 Earnings in Focus; Macau Sales Rise in April
Last week was a big one for the gambling industry, as major casino operators reported their first-quarter 2017 earnings.
While players like Wynn Resorts Ltd. (WYNN - Free Report) , MGM Resorts International (MGM - Free Report) and Penn National Gaming Inc. (PENN - Free Report) reported better-than-expected results, Las Vegas Sands Corp. (LVS - Free Report) and Monarch Casino & Resort Inc. (MCRI - Free Report) posted mixed results.
Though Las Vegas Sands’ earnings beat the Zacks Consensus Estimate, revenues missed the mark. Meanwhile, Monarch Casino & Resort failed to beat bottom-line expectations while its top line surpassed.
On the other hand, Churchill Downs Inc. (CHDN - Free Report) lagged on both fronts.
Additionally, Macau's gaming revenues rose for the ninth consecutive month in April. This signals that the casino hub is firmly on its path to recovery from the two-year slump stemming from China's anti-graft corruption drive and slow economic growth.
Moreover, the Nevada Gaming Control Board announced an increase in revenues in the region in March.
Gaming Industry 5YR % Return
Gaming Industry 5YR % Return
Recap of the Week’s Most Important Stories
1. Wynn Resorts posted earnings of $1.24 per share in the fourth quarter, beating the Zacks Consensus Estimate of 74 cents by 67.6%. Further, this Zacks Rank #1 (Strong Buy) company’s earnings increased 15.9% from the year-ago figure of $1.07 mainly due to higher revenues. You can see the complete list of today’s Zacks #1 Rank stocks here.
Net revenue of $1.48 billion surpassed the Zacks Consensus Estimate of $1.34 billion by 10.4%. Moreover, revenues increased 47.9% on the back of higher revenues from Wynn Palace along with favorable performance by the company’s Las Vegas Operations, partly offset by lower revenues from Wynn Macau.
Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 42.4% year over year to $427.5 million on higher revenues from Wynn Palace and its Las Vegas Operations (read more: Wynn Resorts Q1 Earnings & Revenues Top, Stock Up).
2. MGM Resorts posted first-quarter 2017 adjusted earnings of 38 cents per share which came below the Zacks Consensus Estimate of 26 cents by 46.2%. Moreover, earnings were significantly above the year-ago quarter figure on account of higher revenues.
Additionally, this Zacks Rank #3 (Hold) company’s total revenue of $2.71 billion beat the Zacks Consensus Estimate of $2.61 billion by nearly 4% and jumped 22.6% year over year. The upside reflects a significant increase in revenues from the company’s Las Vegas operations and MGM China as well.
Adjusted property EBITDA at MGM Resorts’ wholly owned domestic resorts was $648 million, up 34% year over year. The Profit Growth Plan that commenced in Jul 2015 continues to bear fruit and is being reflected in improving profits (read more: MGM Resorts Stock Rises on Q1 Earnings & Revenue Beat).
3. Las Vegas Sands’ fourth-quarter earnings of 66 cents surpassed the Zacks Consensus Estimate of 62 cents by nearly 6.5% and jumped 40.4% year over year owing to higher revenues.
Quarterly net revenues of $3.11 billion came slightly below the Zacks Consensus Estimate of $3.12 billion but increased 14.3% year over year primarily on the back of solid performance at its Las Vegas properties, somewhat offset by mostly weak results in Macao. On a consolidated basis, adjusted property EBITDA increased 24.9% year over year to $1.15 billion during the quarter owing to higher revenues (read more: Las Vegas Sands Earnings Beat, Revenues Miss in Q1).
This Zacks Rank #3 company stated that its industry-leading Cotai Strip property portfolio in Macao experienced strong visitation and higher hotel occupancy rates buoyed by the addition of The Parisian Macao.
4. Per the Macau Gaming Inspection and Coordination Bureau, gross gaming revenues for April rose 16.3% on a yearly basis to roughly $2.52 billion or 20.2 billion patacas.
Looking back, a tough operating environment in Macau has been weighing on casino stocks since Jun 2014 to the most part of 2016. The crackdown on corruption in China compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau.
Consequently, this lowered footfall at local casinos. A slowdown in China, tighter visa policies, political unrest and a smoking ban on mass market gaming floors compounded the woes.
However, Macau's gambling revenues have been rising since second-half 2016 with new resorts attracting high rollers as well as leisure gamblers.
Efforts undertaken by Macau operators to revive revenues by wooing tourists and recreational gamblers with family-friendly resorts and more non-gaming facilities have started yielding results. This is evident from revenue growth in the past nine months.
Though concerns related to the sustainability of revenues from the VIP market linger, it seems that the worst is over for Macau’s gambling industry.
Still, a complete rebound in the region will take time as evident from the general weakness in casino operators’ performance in Macau in Q1.
5. According to the Nevada Gaming Control Board, gambling revenues in the state increased nearly 7.5% in Mar 2017 from the year-ago period to $991 million. More specifically, casino revenues in the Las Vegas Strip – which account for more than half of Nevada’s total revenue – were up 8.1% year over year in the month. Reno, too, recorded an 8.1% rise in casino revenues.
Notably, revenues in the region have been pretty patchy over the past few months. After the slump in November and December, revenues were solid in January. However, revenues again faltered in February before returning to growth in March.
Price Performance
The following table shows the price movement of the major gambling stocks over the past week and the last six months:
Company
Last Week
Last 6 Months
WYNN
6.4%
30.1 %
LVS
2.3%
1.9%
MGM
5.9%
17.4%
PENN
-1%
42.9%
MCRI
0.2%
24.6%
CACQ
10.1%
49.8%
BYD
0.7%
27%
Over the last five trading sessions, share price movement of the major gambling stocks was mostly encouraging. Caesars Acquisition Company gained the maximum of 10.1% followed by Wynn Resorts and MGM Resorts’ rise of 6.4% and 5.9%, respectively. However, Penn National Gaming lost 1%.
Moreover, over the last six months, the price performance of gambling stocks was positive. Among the stocks that appreciated the most were Caesars Acquisition Company and Penn National Gaming that gained 49.8% and 42.9%, respectively. Wynn Resorts too recorded a gain of 30.1% over the same time frame.
What’s Next in the Gambling Space?
We note that gambling stocks have oscillated between gains and losses in recent sessions and with the earnings season in full swing, investors can expect this volatility to continue in the coming days.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>