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Gambling Stock Roundup: Macau Early June Data Positive, Caesars Granted Reprieve
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Stocks in the gambling industry seem to be looking up with major companies gaining value, possibly buoyed by the announcement of positive Macau revenue trends for early June.
Meanwhile, Caesars Entertainment Corp. (CZR - Free Report) was granted a reprieve by a U.S. bankruptcy judge pertaining to few bondholders’ lawsuits. Additionally, MGM Resorts International (MGM - Free Report) announced an increase in its previously issued profit growth plan target on its Analyst and Investor day.
In a separate development, Isle of Capri Casinos, Inc. reported fourth quarter and fiscal 2016 results. The company reported mixed results with the bottom line beating the Zacks Consensus Estimate and the top line lagging.
Recap of the Week’s Most Important Stories
1. Share price of leading casino operators rallied last week, after several brokerages reportedly cited that Macau’s gaming industry posted a positive year-on-year performance in the first 12 days of June. In fact, Telsey Advisory Group estimates gross gaming revenues (GGR) in Macau for the month of June to be up roughly 5% year over year.
Consequently, share price of casino companies, Wynn Resorts Ltd. (WYNN - Free Report) , MGM Resorts, Melco Crown Entertainment Limited and Las Vegas Sands Corp. (LVS - Free Report) rose, as Macau is a key operating region for these companies.
2. Caesars has been accorded a temporary injunction, thereby putting the bondholder suits against the company on hold until Aug 29. Notably, the charges have been leveled by junior bondholders who want Caesars to pay compensations worth $11.4 billion on behalf of its bankrupt unit, Caesars Entertainment Operating Co. (CEOC). However, the ruling bars bondholders from advancing with the proceedings in New York and Delaware. Meanwhile, the judge has urged Caesars, the CEOC unit and the creditors to reach a settlement before the injunction expires. (read more: Caesars Gets a Breather in Bondholders Suit, Stock Up)
3. On its Analyst and Investor day, MGM Resorts raised its previously issued profit growth plan target. The company now expects to achieve annual adjusted EBITDA benefit of $400 million by the end of 2017, an increase from its previously announced target of $300 million. MGM Resorts has shown impressive growth since the announcement of its Profit Growth Plan less than a year ago. The plan focuses on improving revenues and reducing expenses by optimum use of resources; improving purchasing power as well as utilizing technology to improve analytics and forecasting tools. (read more: MGM Resorts Increases Profit Growth Plan Target)
4. Isle of Capri Casinos posted mixed fiscal fourth quarter and full-year 2016 results. In the fiscal fourth quarter, adjusted earnings of 62 cents per share outpaced the Zacks Consensus Estimate of 59 cents. Also, the figure increased 6.9% on a year-over-year basis.
However, net revenues of $264.9 million fell 1.6% year over year and also failed to surpass the consensus mark of $269 million. For the quarter, six of the thirteen properties saw a decline in net revenues, thereby driving the downside in revenues. Meanwhile, adjusted EBITDA inched up merely 0.6% to $65.8 million in the fourth quarter.
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
3.0%
62.8%
LVS
2.1%
13.1%
MGM
2.0%
16.3%
MPEL
4.6%
-13.4%
CACQ
0.7%
48.0%
BYD
1.2%
-0.05%
CZR
6.2%
13.0%
Over the last five trading sessions, share price movement of the major stocks was quite encouraging, with all the companies witnessing positive movement. Caesars gained the highest at 6.2% followed by Melco Crown’s 4.6% increase.
Similarly, over the last six months, the price performance of most of the key gambling stocks was positive. Among the stocks that appreciated the most were Wynn Resorts and Caesars Acquisition Co. , witnessing an increase of nearly 62.8% and 48.0%, respectively. On the contrary, Melco Crown and Boyd Gaming Corp. (BYD - Free Report) recorded a decline over the last six months.
What’s Next in the World of Gambling?
We note that gambling stocks have raked in gains in recent sessions. However, a majority of investment analysts expect Macau’s full-month GGR for June to be in the negative territory, on a year-on-year basis. Thus, the industry’s ability to sustain the positive momentum is in question.
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Gambling Stock Roundup: Macau Early June Data Positive, Caesars Granted Reprieve
Stocks in the gambling industry seem to be looking up with major companies gaining value, possibly buoyed by the announcement of positive Macau revenue trends for early June.
Meanwhile, Caesars Entertainment Corp. (CZR - Free Report) was granted a reprieve by a U.S. bankruptcy judge pertaining to few bondholders’ lawsuits. Additionally, MGM Resorts International (MGM - Free Report) announced an increase in its previously issued profit growth plan target on its Analyst and Investor day.
In a separate development, Isle of Capri Casinos, Inc. reported fourth quarter and fiscal 2016 results. The company reported mixed results with the bottom line beating the Zacks Consensus Estimate and the top line lagging.
Recap of the Week’s Most Important Stories
1. Share price of leading casino operators rallied last week, after several brokerages reportedly cited that Macau’s gaming industry posted a positive year-on-year performance in the first 12 days of June. In fact, Telsey Advisory Group estimates gross gaming revenues (GGR) in Macau for the month of June to be up roughly 5% year over year.
Consequently, share price of casino companies, Wynn Resorts Ltd. (WYNN - Free Report) , MGM Resorts, Melco Crown Entertainment Limited and Las Vegas Sands Corp. (LVS - Free Report) rose, as Macau is a key operating region for these companies.
GAMING Industry Price Index
GAMING Industry Price Index
2. Caesars has been accorded a temporary injunction, thereby putting the bondholder suits against the company on hold until Aug 29. Notably, the charges have been leveled by junior bondholders who want Caesars to pay compensations worth $11.4 billion on behalf of its bankrupt unit, Caesars Entertainment Operating Co. (CEOC). However, the ruling bars bondholders from advancing with the proceedings in New York and Delaware. Meanwhile, the judge has urged Caesars, the CEOC unit and the creditors to reach a settlement before the injunction expires. (read more: Caesars Gets a Breather in Bondholders Suit, Stock Up)
3. On its Analyst and Investor day, MGM Resorts raised its previously issued profit growth plan target. The company now expects to achieve annual adjusted EBITDA benefit of $400 million by the end of 2017, an increase from its previously announced target of $300 million. MGM Resorts has shown impressive growth since the announcement of its Profit Growth Plan less than a year ago. The plan focuses on improving revenues and reducing expenses by optimum use of resources; improving purchasing power as well as utilizing technology to improve analytics and forecasting tools. (read more: MGM Resorts Increases Profit Growth Plan Target)
4. Isle of Capri Casinos posted mixed fiscal fourth quarter and full-year 2016 results. In the fiscal fourth quarter, adjusted earnings of 62 cents per share outpaced the Zacks Consensus Estimate of 59 cents. Also, the figure increased 6.9% on a year-over-year basis.
However, net revenues of $264.9 million fell 1.6% year over year and also failed to surpass the consensus mark of $269 million. For the quarter, six of the thirteen properties saw a decline in net revenues, thereby driving the downside in revenues. Meanwhile, adjusted EBITDA inched up merely 0.6% to $65.8 million in the fourth quarter.
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
3.0%
62.8%
LVS
2.1%
13.1%
MGM
2.0%
16.3%
MPEL
4.6%
-13.4%
CACQ
0.7%
48.0%
BYD
1.2%
-0.05%
CZR
6.2%
13.0%
Over the last five trading sessions, share price movement of the major stocks was quite encouraging, with all the companies witnessing positive movement. Caesars gained the highest at 6.2% followed by Melco Crown’s 4.6% increase.
Similarly, over the last six months, the price performance of most of the key gambling stocks was positive. Among the stocks that appreciated the most were Wynn Resorts and Caesars Acquisition Co. , witnessing an increase of nearly 62.8% and 48.0%, respectively. On the contrary, Melco Crown and Boyd Gaming Corp. (BYD - Free Report) recorded a decline over the last six months.
What’s Next in the World of Gambling?
We note that gambling stocks have raked in gains in recent sessions. However, a majority of investment analysts expect Macau’s full-month GGR for June to be in the negative territory, on a year-on-year basis. Thus, the industry’s ability to sustain the positive momentum is in question.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>