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Gambling Stock Roundup: Macau Gaming Revenues Solid, MGM Announces Job Cuts

Zacks Equity Research

Gaming stocks performed disappointingly last week. The industry has decreased 3.6% compared with the S&P 500 Index''s decline of 2.6%. Although Macau's gaming revenues hit a 5-month high in May, concerns related to the slowdown in China's economy and trade war between Beijing and Washington are likely to keep the same under pressure.

Recap of Last Week’s Most Important Stories

Macau’s Gambling Revenues Surge in May

Macau, which is the world’s largest gambling hub, returned to growth in May after declining in April and March. Gambling revenues from Macau increased 1.8% year over year to 25.95 billion patacas ($3.21 billion) in May. Sequentially, the metric was up nearly 10%, in line with analysts’ expectation. However, flagging China property price continues to impact the high-end VIP segment.

In 2018, gambling revenues from Macau improved 14% to 302.85 billion patacas ($37.6 billion).

MGM Resorts Announces Job Cuts

MGM Resorts International MGM has reportedly followed up on its prior plans to cut jobs. Per a report by Associated Press, the company is in the process of completing 779 employee layoffs, most of which will be from its Las Vegas operations.

In April, MGM Resorts announced the first phase of job cuts, which was aimed to control costs and improve operational efficiency. The company trimmed its workforce by 254 and saved $100 million of labor costs.

Notably, the company resorts to layoffs for offsetting high expenses that characterize the industry. In order to cut costs effectively, MGM Resorts undertook a growth initiative — MGM 2020 — in January and has been steadily focusing on the success of the plan. If executed efficiently, this plan will lead to EBITDA of $200 million in 2020. The company also continues to focus on reducing consolidated net leverage to 3-4 times by the end of 2020.

MGM Resorts has a Zacks Rank #3 (Hold).

Las Vegas Sands Completes Sands Bethlehem Sale

Las Vegas Sands Corp. LVS completed the planned sell-out of Sands Bethlehem, Pennsylvania, to Wind Creek Hospitality — an affiliate of the Poarch Band of Creek Indians of Alabama. Wind Creek Hospitality purchased Sands Bethlehem for $1.3 billion.

Notably, on Mar 8, 2018, Las Vegas Sands had announced its plans to sell Sands Bethlehem. In fact, the agreement with Wind Creek Hospitality was signed after MGM Resorts dropped its plan to acquire the casino. Also, the Pennsylvania Gaming Control Board approved the sale of Bethlehem.

This move underscores Las Vegas Sands’ long-term strategy of focusing singularly on large-scale resort development. The company is also focusing on building integrated resorts for the increasing tourist population.

Las Vegas Sands carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Century Casinos Expands Polish Flagship Casino

Century Casinos, Inc. CNTY has added an extra gaming floor to its casino at the Marriott Hotel in Warsaw, Poland. This 4,000 square feet gaming floor has 15 gaming tables and 20 slot machines and two VIP rooms. In total, the casino has now 35 gaming tables and 70 slot machines.

Century Casinos carries a Zacks Rank of 2.

Price Performance

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


 

In the last five trading sessions, shares of Penn National Gaming, Inc. PENN and Red Rock Resorts, Inc. RRR have lost the most.

However, key sector participants like Century Casinos and Caesars Entertainment Corporation CZR have been the major gainers in the past six months.

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MGM Resorts International (MGM) : Free Stock Analysis Report
 
Penn National Gaming, Inc. (PENN) : Free Stock Analysis Report
 
Caesars Entertainment Corporation (CZR) : Free Stock Analysis Report
 
Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
 
Century Casinos, Inc. (CNTY) : Free Stock Analysis Report
 
Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
 
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