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Nevada August Gaming Revenues Disappoint: Avoid WYNN & LVS

Zacks Equity Research
Gaming revenues in Nevada decline for the second straight month in August. Las Vegas Strip witnesses the second-largest decrease, following Boulder Strip's 16.3% fall in the month.

Investors’ apprehension about the Gaming industry increased after Nevada Gaming Control Board pointed out that gaming revenues in the state had declined for the second straight month in August. Gaming industry, which occupies a space in the bottom 35% of the Zacks Classified industries (166 out of the 255), has witnessed a sharp decline of 14.9% in the past six months compared with the S&P 500 11.9% rally.

Las Vegas & Boulder Strip Lose Most

Per Nevada Gaming Control Board, casinos won nearly $913 million from gamblers in August, down 7.7% from the prior-year period. Revenues from the Las Vegas Strip fell 12.4% due to decline in baccarat revenues. Baccarat – a lucrative but volatile card game which is often a major reason behind swinging casino fortunes – fell 8.9% in the same month. Las Vegas Strip witnessed the second largest decline following Boulder Strip’s 16.3% fall in August.

While revenues at North Las Vegas, Laughlin Area and Boulder Strip declined, the same at the Mesquite, Reno and Lake Tahoe markets witnessed a gain. Per analysts, August revenues compared unfavorably with the prior-year’s growth of 21.4%.

Notably, the U.S. gambling market has been a big revenue generator for companies like Las Vegas Sands Corp. LVS, MGM Resorts International MGM, Wynn Resorts Ltd. WYNN, and Caesars Entertainment Corp. CZR. Following the news, not much movement was noticed in the share price as the analysts were already anticipating a decline.

Steer Clear of Las Vegas Sands & Wynn Resorts

Shares of Las Vegas Sands have declined 13.1% in the past six months. For 2018 and 2019, earnings estimates witnessed sharp downward revisions of 3.8% and 2.7%, respectively, over the past 60 days. Also, increased hotel openings and promotional activities have made Las Vegas and Macao markets highly competitive. Thus, excess supply, especially in the Macao market, might hurt the company’s market share. Las Vegas Sands currently has a Zacks Rank #4 (Sell).

Wynn Resorts is another stock, which has disappointed investors with its performance. This Zacks Rank #5 (Strong Sell) company has witnessed a sharp decline of 26.8% in the past six months. Further, earnings estimate for 2018 and 2019 moved south 68 cents and 78 cents to $7.58 and $8.92 per share, respectively, over the past 60 days.

Of late, disappointing Macau performance has also been weighing on the company’s performance. Moreover, dismal gaming revenues in Nevada for the second straight month in August increased investors’ woes.

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

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
Caesars Entertainment Corporation (CZR) : Free Stock Analysis Report
MGM Resorts International (MGM) : Free Stock Analysis Report
Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
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