The Zacks Analyst Blog Highlights: Penn National Gaming, Pinnacle Entertainment, Monarch Casino & Resort, Caesars Entertainment and MGM Resorts International

Zacks

For Immediate Release
 
Chicago, IL – July 29, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Penn National Gaming Inc. (PENN-Free Report), Pinnacle Entertainment Inc. (PNK-Free Report), Monarch Casino & Resort Inc. (MCRI-Free Report), Caesars Entertainment Corporation (CZR-Free Report) and MGM Resorts International (MGM-Free Report).
 
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Here are highlights from Monday’s Analyst Blog:

Gambling Stock Roundup

Last week, Penn National Gaming Inc. (PENN-Free Report) posted mixed second-quarter 2014 results with earnings per share missing the Zacks Consensus Estimate while revenues beating marginally. Meanwhile, Pinnacle Entertainment Inc. (PNK-Free Report) and Monarch Casino & Resort Inc. (MCRI-Free Report) missed the estimates both on top and bottom lines. Share price of these companies fell after the announcement of their respective results.

Further, Caesars Entertainment Corporation (CZR-Free Report) has received approval from Illinois casino regulators for a $1.75 billion refinancing. Meanwhile, MGM Resorts International (MGM-Free Report) has also received approval to build a MGM Resorts casino and hotel worth $925.0 million at the National Harbor complex. (Read last to last week’s developments: Gambling Stock Round up for Jul 21, 2014).

Recap of the Week’s Important Stories:

1. Penn National Gaming posted mixed second quarter 2014 results with adjusted earnings of 5 cents missing the Zacks Consensus Estimate of 7 cents by 25.6%. However, it was above management’s expectation of 4 cents. Net revenues of $652.1 million surpassed beat the consensus mark of $652.0 million by 0.5% and also exceeded management’s expectation of $640.5 million. However, it declined 14.3% year over year due to a decline in revenues at East/Midwest and Southern Plains segments.

The company expects earnings per share and revenue of 6 cents and $633.5 million, respectively, in the third quarter of 2014. The company lowered its earnings guidance for 2014. It expects earnings of 2 cents compared to its previous expectation of 12 cents. However, it increased its revenue expectation to $2.55 billion compared to the previous expectation of $2.51 billion.

2. Pinnacle Entertainment posted lower- than expected second quarter results with adjusted earnings of 37 cents per share that missed the Zacks Consensus Estimate of 48 cents, by 23.0%. However, earnings increased significantly year over year, on higher year-over-year revenues.

Net revenues of $555.2 million significantly went up year over year, owing to on the back of higher gaming, food and beverage and lodging revenues. However, it declined 2.6% on a yearly basis when compared on a retrospective basis (including Ameristar properties in the prior year period). The company had acquired Ameristar properties in Aug 2013. Net revenues of $555.2 million, missed the consensus mark by 0.9%.

In one other development, Orange Capital, beneficial owner of approximately 4.4% of Pinnacle Entertainment’s common stock, issued a statement related to a letter sent by the former to the latter. Orange Capital had outlined a PropCo Transaction in the letter with a target effective date of May 31, 2015. It would like Pinnacle Entertainment to separate its owned real estate into an independent publicly listed real estate investment trust (“REIT” or “PropCo”), which would be distributed to shareholders via a tax-free spin-off.

Orange Capital indicated that despite the successful Ameristar acquisition, Pinnacle Entertainment is valued at a significant discount to other casino operators like Penn National Gaming as well as its spun-off company Gaming & Leisure Properties, Inc. It believes that the transaction would boost Pinnacle’s price by 60.0% to 90.0%.

The 4.4% beneficial owner also indicated that it is not satisfied with the company’s response and is seeking for a response from the company.

3. Monarch Casino & Resort posted disappointing second quarter results with earnings of 18 cents that missed missing the Zacks Consensus Estimate of 32 cents per share by 43.8% and declined declining 51.4% year over year. The downside reflects lower decline in revenues and higher operating expenses. Net revenue of $47.8 million also missed the consensus mark of $49.0 million by 2.4% and declined 3.7% declined year over year. The results reflect lower casino revenue at both Atlantis and Monarch Black Hawk.

4. Reportedly, Caesars Entertainment has received approval from Illinois casino regulators for $1.75 billion refinancing. On Jun 27, 2014, the Illinois Gaming Board had delayed and blocked the decision for the approval for refinancing due to opposition from some bondholders. However, a group of debt holders have now convinced the Illinois Gaming Board today that Caesars was keeping the finances of Caesars Entertainment Operating Co. (:CEOC), at risk by shifting casino assets to other subsidiaries in order to get rid of their the guarantee of their debt. Caesars is still burdened by debt from a $30.7 billion leveraged buyout in 2008 led by Apollo Global Management LLC and TPG Capital.

5. In one other development, MGM Resorts has received approval from Prince George's County, MD to build a MGM Resorts casino and hotel at the National Harbor complex just outside of Washington, D.C. The casino worth $925.0 million is scheduled to open by Jul 2016. This permission paves the way for seeking further permits. Share price increased 2.8% in response.

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