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Gambling Stock Roundup: Earnings for MGM, BYD, MPEL and More

Zacks Equity Research

The gambling industry’s focus was on fourth-quarter 2016 earnings last week.

Both Boyd Gaming Corp. BYD and MGM Resorts International MGM posted mixed results. Though Boyd Gaming’s earnings beat the Zacks Consensus Estimate, revenues missed the mark. Meanwhile, MGM Resorts failed to beat bottom-line expectations while its top line surpassed the same.

On the other hand, Melco Crown Entertainment Ltd. MPEL posted better-than-expected results with earnings and revenues beating the Zacks Consensus Estimate.

Gaming Industry 5YR % Return

 

Gaming Industry 5YR % Return

Recap of the Week’s Most Important Stories  

1.    Boyd Gaming posted adjusted earnings of 38 cents per share in fourth-quarter 2016, which surpassed the Zacks Consensus Estimate of 23 cents by 65.2% and increased substantially on a year-over-year basis.

Net revenue of $554.8 million, however, failed to beat the consensus mark by nearly 1% but inched up 2.2% year over year. Gaming, food and beverage, room and other revenues all witnessed an increase in the quarter. Total adjusted EBITDA was $138.8 million, up 5.7% year over year. Boyd Gaming currently has a Zacks Rank #3 (Hold).

2.    MGM Resorts posted fourth-quarter 2016 adjusted earnings of 11 cents per share which came below the Zacks Consensus Estimate of 17 cents by 35.3%. Reported earnings however compared favorably with the year-ago quarter loss of 1 cent.

However, this Zacks Rank #3 company’s total revenue of $2.46 billion beat the Zacks Consensus Estimate of $2.44 billion by nearly 1% and jumped 12.3% year over year. The upside reflects a significant increase in Las Vegas operations primarily driven by the acquisition of The Borgata – Atlantic City’s top casino, and a slight increase in revenues from MGM China (read more: MGM Resorts Q4 Earnings Lag, Revenues Top, Stock Down).

3.    Melco Crown reported adjusted earnings per share of 13 cents in the fourth quarter, which outpaced the Zacks Consensus Estimate of 10 cents by 30%. This Zacks Rank #2 (Buy) company’s earnings also increased 44.4% over the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, quarterly net revenue of $1.19 billion surpassed the Zacks Consensus Estimate of $1.15 billion by nearly 4% and increased 12.7% on a year-over-year basis. The improvement was primarily driven by contributions from Studio City, launched in Oct 2015, as well as higher casino revenues at City of Dreams Manila. These upsides were, however, partially offset by lower casino revenues at City of Dreams Macau and Altira Macau.

Adjusted Property EBITDA (earnings before interest, taxes, and amortization) was $304.3 million in the quarter under review, up 28.7% year over year. The upside was prompted by increased contribution from the fully operating Studio City and higher casino revenues at City of Dreams Manila, but somewhat offset by lower contribution from Altira Macau (read more: Melco Crown Stock Down Despite Q4 Earnings Beat).

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

-3.1%

-3.8%

LVS

-2.1%

-0.2%

MGM

-8.8%

9.2%

MPEL

-2.7%

26.8%

MCRI

0.08%

-1.3%

CACQ

3.9%

25.2%

BYD

-2.6%

3.4%

Over the last five trading sessions, share price movement of the major gambling stocks was predominantly negative. MGM Resorts and Wynn Resorts Ltd. WYNN lost the maximum at 8.8% and 3.1%, respectively. Meanwhile, Caesars Acquisition Company CACQ recorded a gain of 3.9%.

However, over the last six months, the price performance of the gambling stocks witnesses a mixed trend. Among the stocks that appreciated the most were Melco Crown and Caesars Acquisition that witnessed an increase of 26.8% and 25.2%, respectively. On the contrary, Wynn Resorts and Monarch Casino & Resort, Inc. MCRI recorded a decline of 3.8% and 1.3%, respectively, over the same time frame.

What’s Next in the Gambling Space?

We note that gambling stocks have oscillated between gains and losses in recent sessions and with the earnings season in its last leg, investors can expect this volatility to continue in the coming days.

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