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Forget WYNN & LVS: 3 Gaming Stocks to Beat Coronavirus Blues

Mrithunjoy Kaushik

The coronavirus has now infected millions across the globe and has wreaked havoc on industries like Transportation, Leisure, Restaurants, Auto, Pharma, Electronics, Technology, Cosmetics and Apparel.

Notably, the gaming industry isn’t immune either. Shares of two major industry players, Wynn Resorts, Limited WYNN and Las Vegas Sands Corp. LVS, have plunged 49.1% and 30.7%, respectively, so far this year.

Impact of the Outbreak on WYNN & LVS

Wynn Resorts’ business in China and Las Vegas has been negatively impacted. Although most of the casinos in Macau have resumed operations after coronavirus-induced shutdown, casino tables are still empty.

The company stated that footfall in Macau has declined sharply ever since the outbreak of coronavirus in China. In Macau, casinos were shuttered on Feb 5 and were reopened (on a reduced basis) on Feb 20. Although casinos were fully opened on Mar 20, travel restrictions and limited number of tables continue to hurt the company. During the shutdown, the company incurred operating expenses of nearly $2.5 million per day, excluding cash interest expenses of nearly $0.5 million per day. 

Wynn Resorts’ business in the United States will also be impacted by the COVID-19 outbreak. To contain the spread of this deadly virus, the company’s Encore Boston Harbor and Wynn Las Vegas closed operations on Mar 15 and Mar 17, respectively. Wynn Las Vegas will remain shut through at least Apr 30, while Encore Boston Harbor will stay closed through at least May 4. The company has been bearing operating expenses of nearly $3.5 million during the closure, excluding nearly $0.8 million per day of cash interest expenses.

The aforementioned factors are likely to hurt the Zacks Rank #4 (Sell) company’s first-quarter 2020 results. The company now expects revenues in the range of $912-$969 million in the first quarter, which indicates a drop from $1.64 billion reported in the prior-year quarter. The company expects adjusted property EBITDA in the range of $58-$65 million, which suggests a decline from $484 million reported in the year-ago quarter.

Las Vegas Sands has already closed its Venetian and Palazzo resorts in Las Vegas due to the outbreak. The company also announced that it will continue to pay its employees during the lockdown. 

Let’s take a look at Las Vegas Sands, earnings estimate revisions to get a clear picture of what analysts are thinking about the company. In the past 60 days, the Zacks Consensus Estimate for 2020 and 2021 has declined by 69.4% and 22.4% to 92 cents and $2.70, respectively. Las Vegas Sands holds a Zacks Rank #5 (Strong Sell).

Way Ahead

Nevertheless, this should not discourage investors from choosing some better-ranked stocks from the gaming domain that boast solid prospects.

Stocks to Consider

The Stars Group Inc. TSG: The online gaming and betting company that primarily operates in Europe, Australia and the Americas, carries a Zacks Rank #2 (Buy). 

The Zacks Consensus Estimate for current-year earnings has been revised 1.1% upward in the past 60 days. On a year-over-year basis, its earnings estimates for 2020 and 2021 indicate year-over-year growth of 35.2% and 17.2%, respectively. Shares of the company have surged 62.1% in the past month. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zynga Inc. ZNGA: The company develops, markets and operates social games as live services in the United States as well as internationally. Founded in 2007, the stock carries a Zacks Rank #2. The stock has returned 17.7% in the past month. 

The consensus mark for the company’s current-year earnings has been revised 9.5% upward in the past 30 days. Notably, the Zacks Consensus estimate for 2020 earnings is pegged at 23 cents, which suggests an increase by a penny from the prior-year quarter’s reported figure.

Super League Gaming, Inc. SLGG:  Super League Gaming is an amateur esports community and content platform. The company currently carries a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 14.1%. Shares of the company have surged 68.8% in the past month.

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
 
Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
 
Zynga Inc. (ZNGA) : Free Stock Analysis Report
 
Amaya Inc. (TSG) : Free Stock Analysis Report
 
Super League Gaming, Inc. (SLGG) : Free Stock Analysis Report
 
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