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The Zacks Gaming industry is benefiting from improving visitation. The industry is gaining from positive momentum in Macau's gaming revenues. Robust demand for sports betting is aiding the industry. The expansion of online betting offerings bodes well. Stocks like Las Vegas Sands Corp., Wynn Resorts, Ltd. and Boyd Gaming Corp. are likely to gain traction from this upbeat demand.
Industry Description
The Zacks Gaming industry includes companies that primarily own and operate integrated casinos, hotels and entertainment resorts. Some industry players also deliver technology products and services across lotteries, electronic gaming machines, sports betting and interactive gaming. Some industry participants further develop and operate gaming establishments and associated lodging, restaurant, horse racing and entertainment amenities.
Some companies are also involved in developing and selling gaming applications. Additionally, e-sport or sporting event or tournament services, content management systems, video software, mobile applications and e-sports data platform solutions are provided.
Key Themes Shaping the Gaming Industry
Visitation Improving: The industry is benefiting from improving visitation. In February, Macau's gross gaming revenue (GGR) jumped 33.1% year over year to MOP$10.32 billion (US$1.27 billion). For the first two months of February, GGR surged 55.3% year over year. The director of the Institute for the Study of Commercial Gaming (under the University of Macau), Davis Fong, estimates that Macau's GGR is likely to be between MOP130 billion ($16 billion) and MOP150 billion ($18.5 billion) in 2023, which is 44.5-50% of 2019 levels.
Companies continue to focus on the level of services, staffing with selective amenities and enhanced safety and social-distancing protocols on the gaming floor to welcome gamers. Nevertheless, the easing of restrictions and investment will boost gaming revenues in Macau. In the next 10 years, six casino companies will invest nearly $15 billion.
U.S. Commercial Gaming Revenues Make Record: The gaming industry in the United States is recovering faster than anticipated. Per the American Gaming Association data, revenues from gambling hit a record high of $60.42 billion in 2022. In 2022, sports betting increased 72.7% year over year. Gambling was already flourishing in the United States until the pandemic struck in early 2020. The U.S. gaming industry will continue to improve.
Sports Betting a Major Driver: The legalization of sports betting in Delaware, Mississippi, New Jersey, New Mexico, West Virginia, Pennsylvania, Rhode Island, Montana, Indiana, Tennessee, Illinois and New Hampshire has been driving growth for a while. Bettors can now place wagers via digital platforms in Connecticut, Kentucky, Michigan, Massachusetts, Maryland, Minnesota, Missouri, Kansas, Louisiana, Oklahoma, South Carolina, California, Oregon, Arizona, Montana, Colorado and other states. Some popular gaming applications include DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Gaming industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #56, which places it in the top 22% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential. Since Jan 31, 2023, the industry's northbound estimate for the current year has increased 1,100%.
Industry Outperforms Sector and the S&P 500
The Zacks Gaming industry has outpaced the S&P 500 Index and the broader Zacks Consumer Discretionary sector over the past year.
The industry has gained 7.8% over this period against the S&P 500 Index's decline of 11% and the sector's decrease of 19.2%.
Gaming Industry's Valuation
Since gaming companies are debt-laden, valuing the same based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio makes sense. The industry currently has a forward 12-month EV/EBITDA ratio of 13.53. The space is trading at a discount compared to the market at large, as the forward 12-month EV/EBITDA ratio for the S&P 500 is 19.71.
Over the past five years, the industry has traded as high as 16.60X and as low as 6.82X, with a median of 10.6X.
3 Zacks Gaming Stocks to Watch
Las Vegas Sands: Based in Las Vegas, NV, Las Vegas Sands is a leading international developer of multi-use integrated resorts. The company is benefitting from solid business model, extensive non-gaming revenue opportunities, high-quality assets and attractive property locations. The company is optimistic about Macau's recovery on the back of resilient customer demand and spending.
Shares of this presently Zacks Rank #1 (Strong Buy) player have increased 71.3% in the past year. Moreover, LVS's 2023 earnings and sales are anticipated to increase 217.5% and 107.7% each from the respective year-ago reported figures. You can see the complete list of today's Zacks #1 Rank stocks here.
Wynn Resorts: Based in Las Vegas, NV, Wynn Resorts, the company, together with its subsidiaries, is a leading developer, owner and operator of casino resorts. The company is benefiting from improved non-gaming revenues and expansion efforts. The company has entered into a definitive agreement with Realty Income Corporation for the sale-leaseback of its real estate at Encore Boston Harbor.
Shares of this presently Zacks Rank #1 player have surged 52.3% in the past year. WYNN's 2023 earnings and sales are anticipated to increase 119% and 42% each from the respective year-ago reported numbers.
Boyd Gaming: Headquartered in Las Vegas, Boyd Gaming Corporation is a multi-jurisdictional gaming company. The company is benefiting from initiatives to strengthen current operations and growth through capital investment and other strategic measures. The expansion of online betting offerings bodes well. During the fourth quarter, the company made progress in advancing its online strategy, completing the acquisition of Pala Interactive (valued at $170 million) and further expanding its sports-betting partnership with FanDuel.
Shares of this presently Zacks Rank #2 player have declined 10.8% in the past year. In the past 30 days, earnings estimates for 2023 have increased 1% to $5.87.
Why Haven't You Looked at Zacks' Top Stocks?
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Las Vegas Sands, Wynn Resorts and Boyd Gaming
For Immediate Release
Chicago, IL – March 15, 2023 – Today, Zacks Equity Research discusses Las Vegas Sands Corp. (LVS - Free Report) , Wynn Resorts, Ltd. (WYNN - Free Report) and Boyd Gaming Corp. (BYD - Free Report) .
Industry: Gaming
Link: https://www.zacks.com/commentary/2065309/3-stocks-to-buy-from-a-flourishing-gaming-industry
The Zacks Gaming industry is benefiting from improving visitation. The industry is gaining from positive momentum in Macau's gaming revenues. Robust demand for sports betting is aiding the industry. The expansion of online betting offerings bodes well. Stocks like Las Vegas Sands Corp., Wynn Resorts, Ltd. and Boyd Gaming Corp. are likely to gain traction from this upbeat demand.
Industry Description
The Zacks Gaming industry includes companies that primarily own and operate integrated casinos, hotels and entertainment resorts. Some industry players also deliver technology products and services across lotteries, electronic gaming machines, sports betting and interactive gaming. Some industry participants further develop and operate gaming establishments and associated lodging, restaurant, horse racing and entertainment amenities.
Some companies are also involved in developing and selling gaming applications. Additionally, e-sport or sporting event or tournament services, content management systems, video software, mobile applications and e-sports data platform solutions are provided.
Key Themes Shaping the Gaming Industry
Visitation Improving: The industry is benefiting from improving visitation. In February, Macau's gross gaming revenue (GGR) jumped 33.1% year over year to MOP$10.32 billion (US$1.27 billion). For the first two months of February, GGR surged 55.3% year over year. The director of the Institute for the Study of Commercial Gaming (under the University of Macau), Davis Fong, estimates that Macau's GGR is likely to be between MOP130 billion ($16 billion) and MOP150 billion ($18.5 billion) in 2023, which is 44.5-50% of 2019 levels.
Companies continue to focus on the level of services, staffing with selective amenities and enhanced safety and social-distancing protocols on the gaming floor to welcome gamers. Nevertheless, the easing of restrictions and investment will boost gaming revenues in Macau. In the next 10 years, six casino companies will invest nearly $15 billion.
U.S. Commercial Gaming Revenues Make Record: The gaming industry in the United States is recovering faster than anticipated. Per the American Gaming Association data, revenues from gambling hit a record high of $60.42 billion in 2022. In 2022, sports betting increased 72.7% year over year. Gambling was already flourishing in the United States until the pandemic struck in early 2020. The U.S. gaming industry will continue to improve.
Sports Betting a Major Driver: The legalization of sports betting in Delaware, Mississippi, New Jersey, New Mexico, West Virginia, Pennsylvania, Rhode Island, Montana, Indiana, Tennessee, Illinois and New Hampshire has been driving growth for a while. Bettors can now place wagers via digital platforms in Connecticut, Kentucky, Michigan, Massachusetts, Maryland, Minnesota, Missouri, Kansas, Louisiana, Oklahoma, South Carolina, California, Oregon, Arizona, Montana, Colorado and other states. Some popular gaming applications include DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Gaming industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #56, which places it in the top 22% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential. Since Jan 31, 2023, the industry's northbound estimate for the current year has increased 1,100%.
Industry Outperforms Sector and the S&P 500
The Zacks Gaming industry has outpaced the S&P 500 Index and the broader Zacks Consumer Discretionary sector over the past year.
The industry has gained 7.8% over this period against the S&P 500 Index's decline of 11% and the sector's decrease of 19.2%.
Gaming Industry's Valuation
Since gaming companies are debt-laden, valuing the same based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio makes sense. The industry currently has a forward 12-month EV/EBITDA ratio of 13.53. The space is trading at a discount compared to the market at large, as the forward 12-month EV/EBITDA ratio for the S&P 500 is 19.71.
Over the past five years, the industry has traded as high as 16.60X and as low as 6.82X, with a median of 10.6X.
3 Zacks Gaming Stocks to Watch
Las Vegas Sands: Based in Las Vegas, NV, Las Vegas Sands is a leading international developer of multi-use integrated resorts. The company is benefitting from solid business model, extensive non-gaming revenue opportunities, high-quality assets and attractive property locations. The company is optimistic about Macau's recovery on the back of resilient customer demand and spending.
Shares of this presently Zacks Rank #1 (Strong Buy) player have increased 71.3% in the past year. Moreover, LVS's 2023 earnings and sales are anticipated to increase 217.5% and 107.7% each from the respective year-ago reported figures. You can see the complete list of today's Zacks #1 Rank stocks here.
Wynn Resorts: Based in Las Vegas, NV, Wynn Resorts, the company, together with its subsidiaries, is a leading developer, owner and operator of casino resorts. The company is benefiting from improved non-gaming revenues and expansion efforts. The company has entered into a definitive agreement with Realty Income Corporation for the sale-leaseback of its real estate at Encore Boston Harbor.
Shares of this presently Zacks Rank #1 player have surged 52.3% in the past year. WYNN's 2023 earnings and sales are anticipated to increase 119% and 42% each from the respective year-ago reported numbers.
Boyd Gaming: Headquartered in Las Vegas, Boyd Gaming Corporation is a multi-jurisdictional gaming company. The company is benefiting from initiatives to strengthen current operations and growth through capital investment and other strategic measures. The expansion of online betting offerings bodes well. During the fourth quarter, the company made progress in advancing its online strategy, completing the acquisition of Pala Interactive (valued at $170 million) and further expanding its sports-betting partnership with FanDuel.
Shares of this presently Zacks Rank #2 player have declined 10.8% in the past year. In the past 30 days, earnings estimates for 2023 have increased 1% to $5.87.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.