Last week was quite an eventful one for the gambling industry with revenues in Macau for July plunging lesser than expected. Meanwhile, the Nevada Gaming Control Board announced an increase in revenues in the region in June.

On the other hand, second-quarter earnings releases were in the spotlight over the last five trading days.

While Las Vegas Sands Corp. (LVS Quick QuoteLVS - Free Report) posted lower-than-expected earnings and revenues, Wynn Resorts Ltd. (WYNN Quick QuoteWYNN - Free Report) topped on both the earnings and revenues front. Penn National Gaming Inc. (PENN Quick QuotePENN - Free Report) results were a mixed bag as its earnings beat the Zacks Consensus Estimate while revenues missed the same.

GAMING Industry Price Index

GAMING Industry Price Index

Recap of the Week’s Most Important Stories  

1.    Gross gaming revenues (GGR) for the month of July fell 4.5% on a yearly basis to approximately $2.2 billion or 17.8 billion patacas, per the Macau Gaming Inspection and Coordination Bureau. Notably, this marked the 26th month of consecutive decline.

However, the decline was lower than the 8.5% drop recorded in Jun 2016 and compared favorably with the median estimate of a 5.5% decline by Bloomberg analysts. Tourists and leisure gamblers helped boost revenues.

Nonetheless, with the current decline, GGR in Macau for the first seven months of 2016 plummeted 10.5% year over year. The continuous downside reflects the nationwide crackdown on corruption in China. This has 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 has lowered footfall at local casinos. A slowdown in China, tighter visa policies, political unrest and a smoking ban on mass market gaming floors have compounded the woes.  

2.    According to the Nevada Gaming Control Board, Nevada gambling revenues in Jun 2016 increased 6.8% from the year-ago period to $887.4 million. This marked a turnover from the slump witnessed in April and May. More specifically, casino revenues in the Las Vegas Strip – which accounts for more than half of Nevada’s total revenue – were up 9.7% year over year in May. Further, Reno recorded a 4.5% rise in casino revenues.

3.    Las Vegas Sands’ second-quarter earnings of 52 cents missed the Zacks Consensus Estimate of 56 cents by 7.1%. Also, earnings declined 13.3% year over year due to lower revenues and profits.

Quarterly net revenue of $2.65 billion also missed the Zacks Consensus Estimate of $2.74 billion by 3.2% and declined 9.3% year over year due to a weak performance in Macau. On a consolidated basis, adjusted property EBITDA decreased 6% year over year to $955.1 million during the quarter owing to lower revenues.

Nonetheless, the company stated that though the operating environment in Macau continued to be a drag during the quarter, it is showing signs of stabilization, primarily in the mass market (read more: Las Vegas Sands Up Despite Q2 Earnings Miss).

4.    Wynn Resorts posted better-than-expected results in the second quarter with earnings of $1.07 per share beating the Zacks Consensus Estimate of 97 cents by 10.3% and increasing 44.6% year over year owing to higher revenues. Net revenue of $1.06 billion beat the consensus mark of $1.02 billion by 4.1%. Also, it increased 1.7% year over year, buoyed by improved performance in Macau, partly offset by lower revenues in Las Vegas.

Though the Macau region has been struggling over the past few quarters, the company’s consistent efforts to boost tourism and traffic in Macau yielded results and the company managed to turn around its Macau operations this quarter. However, weak revenues in Las Vegas raised concerns (read more:Wynn Resorts Down Despite Q2 Earnings Beat).

5.    Penn National Gaming posted mixed second-quarter 2016 results with earnings of 37 cents beating the Zacks Consensus Estimate of 28 cents by 32.1%. Meanwhile, earnings witnessed a significant rise on a year-over-year basis on the back of higher revenues. Also, earnings were better than management’s expectation.

Net revenue of $769.4 million increased 9.8% year over year due to an increase in gaming and food, beverage, hotel and other revenues. However, it missed the consensus mark by 1.2%.

Price Performance

The following table shows the price movement of the major gambling stocks over the past week and the last six months:

Over the last five trading sessions, share price movement of the major stocks was encouraging, with majority of the companies witnessing positive movement. Melco Crown Entertainment Limited gained the highest at 8% followed by Las Vegas Sands’ 6.0% increase. However, Caesars Entertainment Corporation (CZR Quick QuoteCZR - Free Report) lost around 0.9% value.

Meanwhile, over the last six months, the price performance of the gambling stocks too was mostly positive. Among the stocks that appreciated the most were Caesars Acquisition Company and Wynn Resorts, witnessing an increase of nearly 92.1% and 46.0%, respectively. On the contrary, Melco Crown recorded a decline of 5.9% 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.

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 >>