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Gambling Stock Roundup: Monarch Casino, Pinnacle Entertainment & Isle of Capri Casinos' Earnings

Zacks Equity Research

The gambling industry’s focus was on earnings releases last week.

Monarch Casino & Resort Inc. MCRI posted better-than-expected fourth-quarter 2016 results with earnings and revenues beating the Zacks Consensus Estimate. Consequently, shares of the company gained nearly 7% on the day of the release, reflecting positive investors’ sentiments.

Meanwhile, Pinnacle Entertainment, Inc. PNK posted profit in fourth-quarter 2016 that compared favorably with the Zacks Consensus Estimate of a loss. Its top line too outpaced the consensus mark.

On the other hand, Isle of Capri Casinos, Inc. ISLE failed to surpass both top and bottom-line expectations in its third-quarter fiscal 2017 results.

Gaming Industry 5YR % Return

 

Gaming Industry 5YR % Return

Recap of the Week’s Most Important Stories  

1.    Monarch Casino & Resort’s fourth-quarter earnings of 36 cents per share beat the Zacks Consensus Estimate of 31 cents by 16.1% Also, earnings increased 24.1% year over year on the back of higher revenues.

Net revenue of $55.6 million surpassed the consensus mark by over 3.5%. Moreover, revenues rose 8% year over year, reflecting solid growth at both Atlantis and Monarch Casino Black Hawk casinos. This Zacks Rank #3 (Hold) company also witnessed an increase in food and beverage and other revenues. However, hotel revenues declined somewhat for the quarter.

2.    Pinnacle Entertainment posted fourth-quarter 2016 adjusted earnings of 10 cents per share which compared favorably with the Zacks Consensus Estimate of a loss of 8 cents. However, earnings decreased considerably from the year-ago figure of 40 cents.

Net revenue of $637.4 million beat the consensus by over 1% and went up 14.1% year over year, owing to increased contribution from The Meadows Racetrack and Casino and growth in the company's same-store portfolio of businesses. This Zacks Rank #2 (Buy) company experienced an increase in revenues at the Midwest, South and West segments on a year-over-year basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3.    Isle of Capri Casinos posted third-quarter fiscal 2017 adjusted earnings of 17 cents per share which were in line with the prior-year quarter figure. The reported earnings, however, failed to beat the Zacks Consensus Estimate of 18 cents by 5.6%.

Moreover, net revenues of $193.8 million fell 1.4% year over year and failed to surpass the consensus mark of $203.4 million by 4.7%. An increase in room revenues was more than offset by a decrease in casino and food, beverage, pari-mutuel and other revenues. Meanwhile, adjusted EBITDA increased 5.5% to $43.5 million in the quarter. Isle of Capri Casinos presently has a Zacks Rank #3.

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

-2%

3.9%

LVS

0.2%

2.8%

MGM

-2.1%

11.5%

MPEL

-4.3%

22.6%

MCRI

10.1%

12.5%

CACQ

-1.4%

17.4%

BYD

-2%

-1%

Last week, share price movement of the major gambling stocks was predominantly negative. Melco Crown Entertainment Ltd. MPEL and MGM Resorts International MGM lost the maximum by 4.3% and 2.1%, respectively. Meanwhile, Monarch Casino & Resort recorded a gain of 10.1%.

However, over the last six months, the price performance of gambling stocks was mostly positive. Among the stocks that appreciated the most were Melco Crown and Caesars Acquisition Company CACQ that witnessed an increase of 22.6% and 17.4%, respectively. On the contrary, Boyd Gaming Corp. BYD recorded a decline of 1% 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. Now, with the earnings season about to wind up, investors can expect this volatility to continue in the coming days.

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