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Gambling Stock Roundup: MGM & RRR Q4 Earnings Solid, AGS Seals Integrity Gaming Buyout

Zacks Equity Research

Last week was a busy one for the gambling industry with some constituent stocks reporting fourth-quarter 2018 results. Among the most notable players MGM Resorts International MGM and Red Rock Resorts, Inc. RRR delivered better-than-expected results. Moreover, PlayAGS, Inc. AGS completed the purchase of Integrity Gaming Corp.

Recap of the Last Week’s Most Important Stories

MGM Resorts Earnings & Revenues Top Estimates

MGM Resorts reported impressive results in fourth-quarter 2018, wherein earnings and revenues outpaced the respective Zacks Consensus Estimate. Adjusted earnings of 14 cents surpassed the consensus estimate of 13 cents. The bottom-line figure also compared favorably with the year-ago quarter’s break-even profit.

Meanwhile, total revenues of $3,052.9 million outpaced the consensus mark of $2,954 million and increased 17.5% year over year. The improvement was backed by higher revenues at both gaming and non-gaming facilities.

MGM China’s net revenues increased 33% year over year to $687 million owing to net revenue contribution of $287 million from MGM Cotai.

At Las Vegas Strip Resorts, net revenues increased 6% year over year to $1.4 billion. Revenue per available room (RevPAR) also improved 8.2% from the prior-year quarter number. Adjusted property EBITDA was up 15% year over year, while EBITDA margin expanded 51 bps in the current reporting cycle. (Read more: MGM Resorts Earnings & Revenues Surpass Estimates in Q4)

MGM Resorts has a Zacks Rank #5 (Strong Sell).

Red Rock Resorts Q4 Earnings & Revenues Beat Estimates

Red Rock Resorts reported better-than-expected results in fourth-quarter 2018, after reporting mixed numbers in the prior-year quarter. Notably, this marked the company's fourth straight quarter of revenue beat. Results were driven by robust Las Vegas operations performance.

Adjusted earnings came in at 30 cents per share, beating the Zacks Consensus Estimate by a penny. However, the metric declined 9.1% on a year-over-year basis. Revenues totaled $431.5 million, faring better than the Zacks Consensus Estimate of $406 million. The top line also increased 7.8% year over year. The uptick can primarily be attributed to year-over-year gain in Las Vegas operations, which overshadowed decline in Native American management fees.

Revenues at Las Vegas segment summed $409.5 million, up 10.4% year over year. Also, the segment’s EBITDA increased to $121 million, up 14.4% year over year. On a same-store basis, the segment registered highest growth for both revenues and EBITDA since 2007. Results were driven by solid performance across both gaming and non-gaming segments.

Revenues at Native American Management segment declined 26.9% to $20.4 million. Meanwhile, adjusted EBITDA decreased to $19.1 million from $24.5 million on termination of the Gun Lake management agreement in February 2018.

Red Rock Resorts has a Zacks Rank #4 (Sell).

PlayAGS Completes Integrity Gaming Buyout

PlayAGS, which designs as well as supplies electronic gaming machines along with other products and services for the gaming industry, has announced that it has completed the acquisition of Integrity Gaming Corp. The buyout has expanded the company’s recurring revenue footprint by above 2,700 games.

PlayAGS has 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 past week and the last six months:



In the past five trading sessions, share price movement of some major gambling stocks was mixed. Shares of Century Casinos, Inc. CNTY, Boyd Gaming Corporation BYD and PlayAGS have gained the most.

However, key sector participants like Penn National Gaming, Inc. PENN and Boyd Gaming Corporation were the major losers in the last six months.

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Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
 
Penn National Gaming, Inc. (PENN) : Free Stock Analysis Report
 
Century Casinos, Inc. (CNTY) : Free Stock Analysis Report
 
Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
 
MGM Resorts International (MGM) : Free Stock Analysis Report
 
PlayAGS, Inc. (AGS) : Free Stock Analysis Report
 
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