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Gambling Stock Roundup: WYNN, LVS & Other Q2 Releases in Focus, Nevada Revenues Rise in June

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Last week was a big one for the gambling industry, as major casino operators came up with their second-quarter 2017 earnings results.

Among the most notable players were the likes of Wynn Resorts Ltd. (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) that reported better-than-expected results. Meanwhile, MGM Resorts International (MGM - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) and Boyd Gaming Corporation (BYD - Free Report) posted a mixed bag.

Though MGM Resorts’ earnings beat the Zacks Consensus Estimate, revenues missed the mark. Meanwhile, both Melco Resorts and Boyd Gaming failed to beat bottom-line expectations while their top line surpassed the same.

Meanwhile, the Nevada Gaming Control Board announced an increase in revenues in the region in June.

Gaming Industry 5YR % Return

 

Gaming Industry 5YR % Return

Recap of the Week’s Most Important Stories  

1.    Wynn Resorts posted earnings of $1.18 per share in the second quarter, beating the Zacks Consensus Estimate of $1.09 by 8.3%. Further, this Zacks Rank #2 (Buy) company’s earnings increased 10.3% from the year-ago figure of $1.07 mainly on higher revenues. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Net revenue of $1.53 billion surpassed the Zacks Consensus Estimate of $1.45 billion by 5.3%. Moreover, revenues increased 44.5% on significant contributions from Wynn Palace along with favorable performance by the company’s Las Vegas operations and higher revenues from Wynn Macau.

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 37.5% year over year to $430 million (read more: Wynn Resorts Stock Falls Despite Q2 Earnings Beat).

Weakness in Macau’s mass market and somewhat lower-than-expected results at Wynn palace hampered the company’s quarterly performance to a certain degree.

2.    Las Vegas Sands’ second-quarter earnings of 73 cents topped the Zacks Consensus Estimate of 61 cents by 19.7% and jumped 37.7% year over year led by higher revenues.

Quarterly net revenue of $3.14 billion also surpassed the Zacks Consensus Estimate of $3.02 billion by over 4% and increased 18.6% year over year. The improvement was primarily attributable to robust performance at its Las Vegas properties and mostly solid results in Macao. On a consolidated basis, adjusted property EBITDA increased 26.5% year over year to $1.21 billion during the quarter owing to higher revenues (read more: Las Vegas Sands Q2 Earnings Top on Solid Revenue Growth).

This Zacks Rank #2 company also stated that strong mass revenue growth along with higher hotel occupancy and growth in the VIP segment drove its adjusted property EBITDA in Macao to $600 million, up 23% year over year.

3.    MGM Resorts posted first-quarter 2017 adjusted earnings of 31 cents per share which surpassed the Zacks Consensus Estimate of 28 cents by 10.7%. Moreover, earnings were above the year-ago figure of 26 cents on account of higher revenues.

Meanwhile, this Zacks Rank #3 (Hold) company’s total revenue of $2.64 billion lagged the Zacks Consensus Estimate of $2.66 billion by nearly 1% but jumped 16.4% year over year. The upside reflects a significant rise in revenues from the company’s Las Vegas operations, offset to an extent by weak results at MGM China.

Notably, MGM China’s net revenue fell 1% year over year to $449 million due to lower revenues from main-floor table games, somewhat offset by an increase in revenues from VIP gamblers.

Adjusted property EBITDA at MGM Resorts’ wholly owned domestic resorts was $658 million, up 28% year over year (read more: MGM Resorts' Q2 Earnings Beat on Higher Revenues).

4.    Melco Resorts’ second-quarter earnings of 16 cents per share missed the Zacks Consensus Estimate of 20 cents by 20% However, earnings increased significantly year over year on the back of higher revenues.

This Zacks Rank #2 company’s net revenue of $1.30 billion surpassed the consensus mark by almost 7%. Moreover, revenues increased 21.3% year over year primarily driven by better group-wide rolling chip revenues.

Adjusted Property EBITDA was $329.5 million in the second quarter, up 34% year over year. The upside was prompted by improved performance in the group-wide rolling chip segment (read more: Melco Resorts Misses on Q2 Earnings, Stock Falls).  

5.    Boyd Gaming posted second-quarter adjusted earnings of 26 cents per share, which lagged the Zacks Consensus Estimate of 30 cents by 13.3% and decreased 62.5% on a year-over-year basis. However, net revenue of $600 million was slightly above the consensus mark and rose 10.1% year over year.

An increase in gaming, food and beverage, room and other revenues drove this Zacks Rank #3 company’s top-line. Total adjusted EBITDA was $151.2 million, up 9.6% year over year.

6.    According to the Nevada Gaming Control Board, gambling revenues in the state increased nearly 1% in Jun 2017 from the year-ago period to $895.4 million.    The rise maintains the solid performance in Nevada since March this year. More specifically, casino revenues in the Las Vegas Strip – which account for more than half of Nevada’s total revenue – were up 1.7% year over year in the month. Reno, too, recorded a 1.5% rise in casino revenues.

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

-7.2%

31.4%

LVS

-2.3%

18.4%

MGM

-2.5%

16%

MLCO

-8.2%

24.1%

MCRI

13.4%

43.6%

CACQ

-4.2%

27.3%

BYD

-3.8%

21%

Over the last five trading sessions, share price movement of the major gambling stocks was predominantly negative. Melco Resorts and Wynn Resorts lost the maximum at 8.2% and 7.2%, respectively. Meanwhile, Monarch Casino & Resort, Inc. (MCRI - Free Report) was the sole gainer at 13.4%.

However, over the last six months, the price performance of gambling stocks was positive. Among the stocks that appreciated the most were Monarch Casino and Wynn Resorts that gained 43.6% and 31.4%, respectively. Caesars Acquisition Company also recorded a gain of 27.3% over the same time frame.

What’s Next in the Gambling Space?

We note that gambling stocks have mostly witnessed losses in recent sessions as majority of the casino operators failed to fully capitalize on the rebound in Macau gaming revenues in the quarter and posted far from impressive results. As the earnings season is now in full swing, mediocre results may continue to put the stocks under pressure.

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