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Gambling Stock Roundup: Macau Gambling Sales Impress, PENN & PNK Buyout Okayed, PlayAGS Seals Deal With GVC Holdings

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It was an eventful week for the gaming industry, as Macau's gaming revenues rose for the 25th consecutive month in August. Moreover, revenues also surpassed the analyst’s expectations.

Meanwhile, the pending buyout of Pinnacle Entertainment, Inc. (PNK - Free Report) by Penn National Gaming, Inc. (PENN - Free Report) was green-lit by Missouri Gaming Commission (“MGC”). Moreover, PlayAGS, Inc. (AGS - Free Report) has reached an agreement with GVC Holdings for providing third-party slot content aggregation for real-money betting.

Recap of the Week’s Most Important Stories

Macau’s Gambling Revenues Continues to Increase

Gambling revenues from Macau increased 17% to 26.6 billion patacas ($3.3 billion) in August. The metric also surpassed the analyst’s expectation. Although gambling revenues were up for the 25nd straight months, it still remains below the highest level achieved in 2012.

A tough operating environment in Macau weighed on casino stocks from June 2014 to most part of 2016. In fact, 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.

As a result, footfall declined at the local casinos, leading to a persistent decrease in gaming revenues. A slowdown in China, tighter visa policies, political unrest and a smoking ban on mass market gaming floors have compounded the woes. Nevertheless, Macau's gambling revenues exhibited a turnaround and have been on the rise since the second half of 2016, with new resorts attracting high rollers and leisure gamblers.

Penn National & Pinnacle Entertainment Deal Get Missouri Gaming Commission Approval

Penn National Gaming has received go-ahead signal from the Missouri Gaming Commission (“MGC”) for the acquisition of Pinnacle Entertainment. The deal is likely to be sealed in the fourth quarter. However, the company still requires additional regulatory approval.

The deal has already received green signal from 12 gaming regulatory authorities. Shareholders of both the companies had approved the merger in March. The deal is expected to yield $100 million in annual run-rate cost savings within two years of closing.

Both Penn National and Pinnacle Entertainment have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PlayAGS Seals Deal with GVC Holdings PLC

PlayAGS, which designs as well as supplies electronic gaming machines along with other products and services for the gaming industry, has reached an agreement with GVC Holdings PLC. Per the deal, the PlayAGS will provide third-party slot content aggregation for real-money betting to GVC Holdings. PlayAGS’s iGaming Platform, Gameiom Technologies Limited will provide GVC with a seamless aggregation solution as well as access to more than 600 games.

Price Performance

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

In the last five trading sessions, share price movement of most of the major gambling stocks witnessed a negative trend. Shares of Caesars Entertainment, Melco Resorts (MLCO - Free Report) and Las Vegas Sands declined significantly.

Further, key sector participants like Pinnacle Entertainment and Penn National Gaming  were the major gainers in the past six months.

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