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Gambling Stock Roundup: MGM Extends Macau Gambling License, CNTY & GDEN Post Q4 Results

Zacks Equity Research

Last week, gambling stocks performed disappointingly due to concerns over Macau gaming revenues, slowdown in China, and the trade war between Beijing and Washington. Also, speculations over another crackdown on capital outflows by China have kept investors on the edge. Flagging China property price has impacted the high-end VIP segment. Consequently, the industry underperformed the S&P 500 in the past week. The industry declined 1.8% against the S&P 500 gain of 1.4%.

Recap of the Week’s Most Important Stories

MGM Extends Macau Gambling License

MGM Resorts International MGM announced that Macau government has extended the gambling license for its China until 2022. The license was due for expiry on Mar 31, 2020. For the extension of the contract the company will have to pay 200 million patacas ($24.73 million).

Notably, this Zacks Rank #3 (Hold) company derives a solid share of its revenues from Macau — the largest gaming destination in the world. MGM Resorts is always trying to fortify the Macau business. In this regard, it is imperative to mention that the company is undertaking initiatives to increase revenues and junket productivity in Macau and anticipates a positive trend buoyed by upgrades to main gaming floor products and marketing initiatives. In the fourth quarter of 2018, MGM Resorts experienced 9% revenue growth in Macau.

Moreover, the opening of the world's longest sea-crossing bridge and tunnel last year, which connects Macau to Hong Kong as well as mainland China's Pearl River Delta, is likely to prove beneficial to casino operators.

Century Casinos’ Q4 Earnings Lag Estimates

Century Casinos, Inc. CNTY reported mixed fourth-quarter 2018 results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. However, both the top and bottom line increased year over year owing to robust performance of all its four reportable segments.

Adjusted earnings came in at 2 cents per share, missing the Zacks Consensus Estimate of 6 cents. In the prior-year quarter, the company had reported earnings per share of a penny. Revenues totaled $45.1 million, which outpaced the consensus mark of $43 million and also increased 15% year over year.

At the end of the fourth quarter, this Zacks Rank #5 (Strong Sell) company’s cash and cash equivalents declined to $45.6 million compared with $74.7 million at the end of Dec 31, 2017. Outstanding debt as of Dec 31, 2018, increased to $59.5 million from $56.7 million at the end of Dec 31, 2017. (Read more: Century Casinos Q4 Earnings Lag Estimates, Revenues Top)

Golden Entertainment’s Earnings Miss Estimates in Q4

Golden Entertainment, Inc. GDEN reported mixed fourth-quarter 2018 results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. The company incurred loss of 90 cents per share compared with a loss of 53 cents in the prior-year quarter. The Zacks Consensus Estimate for the fourth quarter was pegged at earnings of 4 cents. Revenue in the quarter totaled $210.1 million, which outshined the consensus estimate of $209 million and also increased 14.4% on a year-over-year basis.

Golden Entertainment has a Zacks Rank #3.

PlayAGS Renews Contract With Chickasaw Nation

PlayAGS, Inc. AGS announced that the company has signed a fresh long-term contract with Chickasaw Nation to supply its 22 casinos in Oklahoma. David Lopez, AGS’ president and chief executive officer, said that “We are appreciative of our 14-year relationship with the Chickasaw Nation, this opportunity to renew our business with them, and their confidence in AGS.”

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

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, most of the gambling stocks witnessed a decline in share price. Shares of Caesars Entertainment Corporation CZR, Penn National Gaming, Inc. PENN and Boyd Gaming Corporation BYD have lost the most.

The key sector participants like Penn National Gaming and Caesars Entertainment were the major losers in the last six months.

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MGM Resorts International (MGM) : Free Stock Analysis Report
 
Penn National Gaming, Inc. (PENN) : Free Stock Analysis Report
 
Century Casinos, Inc. (CNTY) : Free Stock Analysis Report
 
Golden Entertainment, Inc. (GDEN) : Free Stock Analysis Report
 
Caesars Entertainment Corporation (CZR) : Free Stock Analysis Report
 
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
 
PlayAGS, Inc. (AGS) : Free Stock Analysis Report
 
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