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The Zacks Analyst Blog Highlights: MGM Resorts International, Melco Crown Entertainment, Full House Resorts, Caesars Entertainment and Penn National Gaming

Zacks Equity Research

For Immediate Release
Chicago, IL – August 12, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the MGM Resorts International (MGM-Free Report), Melco Crown Entertainment Limited (MPEL-Free Report), Full House Resorts Inc. (FLL-Free Report), Caesars Entertainment Corporation (CZR-Free Report) and Penn National Gaming Inc. (PENN-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Gambling Stock Roundup

Last week, MGM Resorts International (MGM-Free Report) posted mixed second quarter results. Earnings beat the Zacks Consensus Estimate, while revenues missed the same. Meanwhile, Melco Crown Entertainment Limited (MPEL-Free Report) and Full House Resorts Inc. (FLL-Free Report) posted disappointing results and missed the consensus estimates on both fronts. As a result, share price of Melco Crown plunged 4.9% while Full House lost just 1.3%.

Caesars Entertainment Corporation (CZR-Free Report) dominated the headlines with various issues related to the positioning of its subsidiary Caesars Entertainment Operating Company, Inc. (‘CEOC’) for a stock listing and significant deleveraging. (Read: Caesars Entertainment Soars on Funding Plan).

Also, Penn National Gaming Inc. (PENN-Free Report) announced its plans to open Hollywood Gaming at Mahoning Valley Race Course on Sep 17. Meanwhile, Iao Kun Group Holding Company Limited announced that Rolling Chip Turnover for the month of July at the company’s VIP rooms in Macau was $1.60 billion, up 7% year over year. (Read last to last week developments: Gambling Stock Round up for Aug 4, 2014)

Recap of the Week’s Important Stories:

1. MGM Resorts posted mixed second quarter results with adjusted earnings of 21 cents per share beating the Zacks Consensus Estimate of 12 cents by a wide margin and increasing significantly year over year. The upside reflects improved performance in Las Vegas – its domestic territory.

In the quarter, total revenue increased 4% year over year to $2.58 billon driven by an increase in revenues from Las Vegas operations. However, it marginally missed the Zacks Consensus Estimate of $2.59 billion due to a sluggish Macau market. (Read: MGM Resorts Beats Q2 Earnings on Domestic Growth)

Reportedly, MGM Resorts expects approval to operate in New Jersey within the next few months. The company had agreed to exit the state in 2010 by selling its Atlantic City casino resort after state regulators found the company's Macau joint venture with Pansy Ho Chiu-king unsuitable.

The company indicated that the approval would allow it participate more actively in the operations of the Borgata Hotel Casino & Spa in Atlantic City, which it co-owns with Boyd Gaming Corporation. We need to wait and see how this approval helps the company in improving profitability as the market, which was once the gambling hub of the East Coast, is currently reeling under pressure owing to stiff competition.

2. Melco Crown posted second-quarter 2014 results with adjusted earnings of 30 cents per share that missed the Zacks Consensus Estimate of 37 cents by 18.9%. Further, earnings declined from the year-ago figure of 35 cents by 12.4%. The downside reflects lower-than-expected revenues. In the quarter, net revenue declined 7.4% year over year to $1.20 billion and also missed the Zacks Consensus Estimate of $2.59 billion by 9.4% due to lower group-wide rolling chip revenues, partially offset by improved mass market table games revenues. (Read: Melco Crown Misses Q2 Earnings, Revenues on Macau Slowdown)

3. Full House Resorts posted disappointing second quarter 2014 results due to ongoing competition and soft economic conditions, particularly in the Midwest. Adjusted loss of 4 cents compared unfavorably with breakeven results in the year-ago quarter and was also wider than the Zacks Consensus Estimate of a loss of 2 cents. The downside reflects a decline in revenues and increase in food and beverage, and hotel costs.

Total revenue was $31.3 million, down 14.7% year over year. The number also missed the consensus mark by 6%. Lower revenues at all its casino operations, Northern Nevada, Midwest and Gulf Coast were primarily responsible for this decline.

4. Share price of Caesars Entertainment plunged 9.6% on Aug 5 after it was reportedly sued by note holders who said billions of dollars of assets were fraudulently transferred out of CEOC to keep the properties out of the reach of creditors. However, Caesars Entertainment indicated that it is just preparing the CEOC unit for a stock market listing and the asset transfers would allow it to generate cash of more than $3 billion while shedding its capital intensive projects.

In one other development, Caesars Entertainment with its subsidiary CEOC filed a suit in the Supreme Court against certain institutional investors. The company claims that these investors have made attempts to spoil CEOC's restructuring efforts and that it would go into default.

Further, Caesars Entertainment with $23 billion debt is assessing a proposal from senior bondholders to cut debt at its most indebted unit and keep it out of bankruptcy. The proposal would trim debt in exchange for a mix of new debt, cash and securities that would gain value as the company recovers.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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