Top 10 Casino Stocks For 2014: Penn National Gaming Inc.(PENN)
Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.
Advisors' Opinion:- [By Quickel]
Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.
But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.
Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.
During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.
Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.
Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.
The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.
Top 10 Casino Stocks For 2014: Pinnacle Entertainment Inc.(PNK)
Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.
Advisors' Opinion:- [By Jeanine Poggi]
Pinnacle Entertainment(PNK) was the great transition story of 2010, with shares spiking about 45% this year.
The regional casino operator's most impressive story has been in its gross margins, as management, under the leadership of new CEO Anthony Sanfilippo, is in the process of increasing the company's operating efficiencies and prudently allocating capital. Analysts believe Pinnacle is in the early stages of this process, and will continue to drive revenue growth.
In its third quarter, Pinnacle reported a surprise profit of 10 cents a share on an adjusted basis, better than consensus estimates of a loss of 7 cents. Revenue grew 15% to $287.8 million, while property-level margins reached 23.4%, also ahead of forecasts.
Last month, Pinnacle purchased Cincinnati's River Downs Racetrack for $45 million. The deal includes 155 acres, 35 of which are still undeveloped. The transaction is expected to close by the end of the first quarter of 2011.
This deal could generate significant returns in the event that Ohio decides to legalize video lottery terminals at racetracks, Santarelli said.
Pinnacle is also in the process of looking for a buyer of its oceanfront land in Atlantic City, where it originally intended to build a $1.5 billion casino, before squelching plans. The casino operator bought the land in 2006 for $270 million from groups affiliated with Carl Icahn and later added another piece of land for $70 million.
While the land's currently value is $38 million, Pinnacle insists it will not sell it on the cheap, holding out for the best deal.
Pinnacle currently has $228 million in cash and $375 million of availability under its revolver.
- [By Sherry Jim]
Pinnacle Entertainment(PNK) swung to a loss in its second quarter, as costs rose.
During the quarter, the regional casino operator lost $49.3 million, or 81 cents a share, compared with a profit of $4.7 million, or 8 cents, in the year-ago period for Pinnacle.
Excluding items, Pinnacle actually lost 14 cents a share, 10 cents worse than analysts' estimates of a 4-cent loss.
Pinnacle's revenue rose 8.5% to $273.6 million from $252.3 million, but also fell short of Wall Street's forecast of $284.4 million.
Even though revenue was weaker, margins rebounded at all but one of Pinnacle's properties. "Margins are the story for Pinnacle ahead of any longer-term potential true rebound in the economy, and we continue to believe there are multiple opportunities for near-term operational improvements across the Pinnacle portfolio," Bain wrote in a note.
At a time when most casino operators are striving to reduce costs to offset the decline in consumer spending, Pinnacle saw expenses rise 21% to $289.3 million. But Bain said Pinnacle is still in the early stages of cost-refining. "Given what we view as several areas of potential improvements in this regard, we believe Pinnacle is less dependent on an economic recovery than some of its regional peers," he wrote.
J.P. Morgan analyst Joseph Greff also reaffirms his overweight rating on the stock, viewing Pinnacle as a transition story. "We continue to believe that new CEO Anthony Sanfilippo and team will drive increased operating efficiencies and allocate capital prudently," he wrote in a note.
Greff praises Sanfilippo for shelving the Sugarcane Bay project and instead focusing on Baton Rouge.
Pinnacle's liquidity remains strong, with $200 million in cash and $375 million of availability under its revolver
Hot Warren Buffett Stocks To Watch Right Now: Wynn Resorts Limited(WYNN)
Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wyn n Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.
Advisors' Opinion:- [By Jeanine Poggi]
Wynn Resorts'(WYNN) run up of more than 55% this year has caused Wall Street to question its valuation.
Currently, eight analysts have a buy rating on Wynn, 16 say hold, two rate it underperform rating and one says to sell the stock.
"With little on the growth horizon in the intermediate term, new competition from Cotai coming in 2011 and 2012 ... and the unclear timing of a true recovery in Las Vegas, we see few catalysts not yet priced-in to pull valuation higher than current levels," Bain wrote in a note following its third-quarter earnings report.
During the quarter, Wynn lost $33.5 million, or 27 cents a share, compared with a profit of $34.2 million, or 28 cents, in the year-ago period. The loss was attributed to charges related to servicing its debt. On an adjusted basis, Wynn actually earned 39 cents, matching Wall Street's outlook.
Total Revenue grew to $1 billion from $773.1 million, better than the $990.8 million analysts predicted.
In Macau, Wynn reported a 50% surge in revenue to $671.4 million, while EBITDA was $198 million, up 54.5% from $128.2 million in the third quarter of 2009. Earlier in the year the company opened its $600 million Wynn Encore Macau, which added 414 rooms to the market.
Looking ahead, Wynn expects to break ground on its Cotai development in early 2011. The $2 billion to $3 billion project is slated to open in 2015, and management said it would provide additional details following its fourth-quarter earnings report.
In Las Vegas, CEO Steve Wynn says the Strip is on the road to recovery. "I believe we have seen the bottom in Las Vegas," he said during the company's third-quarter conference call. "I don't know how fast it is going to get better but it isn't going to get any worse."
Las Vegas revenue inched up 3.1% to $334.5 million during the three-month period, and EBITDA grew 9.3% to $76.5 million.
Wynn also issued a cash dividend of $8 a share payable on Dec. 7 to sharehold! ers of record on Nov. 23.
- [By Carlson]
Wynn Resorts(WYNN) saw its second-quarter profit more than double, but most of that strength came from casino wins, and investors were unimpressed.
During the quarter, the casino operator earned $52. 4 million, or 52 cents a share, on revenue of $1.03 billion, higher than forecasts of 42 cents on revenue of $992.3 million. This compares with a profit of $25.5 million, or 21 cents, on revenue of $723.3 million, in the year-ago period.
Wynn had already pre-announced disappointing results for its Las Vegas properties, citing higher costs, including employee health care and benefits, and marketing expenses. Its operating loss for its Wynn Las Vegas and Encore widened to $17.2 million from $8.3 million last year. Revenue rose 1.7% to $318 million.
Occupancy at the Wynn Las Vegas jumped to 92.6% from 86.6% a year earlier, but revenue per available room fell 3.2%.
Still, management indicated that there is a slight improvement on the Strip, with an increase in forward group bookings and some bright spots for the ability to yield rates. But management tempered enthusiasm by saying there are some struggles and uncertainty in the marketplace.
"We hope for continued improvement in Las Vegas or -- let me put it different, we hope that we'll get smarter in Las Vegas in dealing with the peculiarities of this market --and this very, very mercurial, national economic market we're living with," said Steve Wynn, chief executive, in a conference call. "The national economy and the political environment in the country as we head up to the elections [is] very, very touchy. And it is impacting all businesses."
The biggest boost, of course, came from Macau, where revenue surged 74% to $714.4 million from $410.4 million last year.
The company opened its Encore Macau in the spring, boosting its market share to about 16% from about 13%, Sterne Agee analyst David Bain wrote in a note.
Wynn is in the process of working on a new development on the Cotai st! rip, which should spike investors' interest as more details are revealed in the coming quarters.
Still, investors are concerned that as comparisons get harder in Macau, and second-quarter results are adjusted for hold (how much the casino won), Wynn may not be able to outperform. But Bain reassures, "this has been discussed as nauseam by investors, sell-side analysts, the press -- and even dinner-table relatives -- for some time. We believe the Street is underestimating the summer months in Macua, which may help to produce a new leg up for Macau stories, with Wynn being the most profitable on a per position basis."
Top 10 Casino Stocks For 2014: Boyd Gaming Corporation(BYD)
Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.
Advisors' Opinion:- [By Hesler]
Boyd Gaming(BYD) posted a bigger-than-expected drop in its second-quarter earnings, citing weak performance in Las Vegas, the Midwest and the South.
During the quarter, the casino operator earned $3.4 million, or 4 cents a share, a 73% plunge from $12.8 million, or 15 cents, in the year-ago period. Adjusted earnings came in at 5 cents a share, significantly lower than the 10 cents Wall Street predicted for Boyd.
Boyd's revenue fell 6% to $578.4 million, also short of the consensus of $588 million.
"The lingering effects of the recession have left consumers unusually sensitive to shifts in the economy, and they now react more quickly to economic data and other developments, such as fluctuations in the stock market," said CEO Keith Smith, in a statement. "Although conditions remain uncertain, we believe long-term stabilizing trends are still in place, and that year-over-year growth is achievable by the end of 2010."
In the Las Vegas locals market, the rate of decline in earnings before interest, taxes, depreciation and amortization rose to 16.2% from 10.8%, J.P. Morgan analyst Joseph Greff wrote in a note. Boyd previously reported a 9.9% decline for its Borgata property in Atlantic City. Revenue came in at $186.9 million, a 2.4% decrease from the year-ago period.
"We think second-quarter results are less important than the coming operating results in the second-half of 2010, when the Atlantic City market faces increased regional competitive pressures from tables in Pennsylvania and West Virginia and the first Philadelphia casino opens this summer," J.P. Morgan analyst Joseph Greff wrote in a note.
Greff reaffirmed his underweight rating on Boyd, given increasing competition in Atlantic City, a weak recovery in the Las Vegas locals market and stagnant regional gaming trends.
While there is no doubt the Atlantic City gaming market remains one of the most depressed, Borgata continues to dominate the market and gain share. Atlant! ic City saw gaming revenues plunge 11.1% in June to $286.8 million. Boyd co-owns Borgata with MGM Resorts, which is currently in the process of divesting its 50% stake.
- [By Jeanine Poggi]
The Las Vegas locals and Atlantic City markets have the longest road to recovery, making Boyd Gaming (BYD) one of the most challenged stocks in the sector long-term.
It's not a surprise then that Boyd saw some of the most muted gains in 2010, with shares rising just 13.8% since the beginning of the year.
In Atlantic City, where Boyd owns a 50% stake in the Borgata, gambling revenue plunged 13% in November. The New Jersey Boardwalk has been under pressure even before the recession began, as nearby regions expand their gaming presence.
Both West Virginia and Pennsylvania added table games to casinos in the second half of the year and new properties opened in Philadelphia and Maryland. In 2011, Atlantic City will also have to contend with additional growth in Pennsylvania and the pending opening of the Aqueduct in New York City.
Given this, Boyd decided not to exercise its right to match a $250 million offer MGM Resorts(MGM) received for its 50% stake in the Borgata. MGM decided to divest its joint venture with Boyd after the Atlantic City Gaming Commission criticized its relationship with Pansy Ho in Macau, whose family has allegedly been tied to organized crime in China.
In the Las Vegas locals market, where Boyd generates about 44% of its EBITDA, trends are improving, but not as quickly as analysts would have hoped. In October, gaming revenue in the market grew 6.2% to $169.4 million.
In its third quarter, Boyd disappointed Wall Street, with adjusted earnings coming in at 2 cents a share, shy of consensus estimates of 5 cents. Revenue dropped 4% to $595.4 million.
Boyd also announced plans to sell $500 million of eight-year notes. Proceeds will be used to buy back senior subordinated notes due 2012 and to repay bank loans.
Top 10 Casino Stocks For 2014: (XTRN)
Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.
Top 10 Casino Stocks For 2014: MGM Resorts International(MGM)
MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.
Advisors' Opinion:- [By Goodwin]
MGM Resorts International(MGM) has the most exposure to the Las Vegas market, making it a bet only for those with thick skin.
For the second quarter, the casino operator lost $883.5 million, or $2 a share, compared with a loss of $212.5 million, or 60 cents, in the year-ago period.
A majority of the loss was attributed to a $1.12 billion writedown on its investment in CityCenter in Las Vegas. This is the third time MGM has had to write down CityCenter, as the casino has seen little improvement in operating profit since it opened in December. The $8.5 billion development took a loss of $128 million.
Excluding this writedown, MGM actually lost 35 cents a share, still significantly more than analysts estimates of a 24-cent loss. MGM's revenue rose 3% to $1.54 billion from $1.49 billion, ahead of analysts' estimates of $1.46 billion.
Revenue-per-available room on the Las Vegas Strip decreased 2%, although Bellagio and MGM Grand showed improvement, the company said. Occupancy levels slipped to 93% from 94% while the average daily rate fell a dollar to $110. "The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery," Chief Executive Officer Jim Murren said in a statement.
Some of MGM's losses in Las Vegas were offset by its joint venture in Macau with Pansy Ho. MGM Macau earned $40 million, compared with a loss of $8 million last year
Outside of Vegas, MGM said last week that it agreed to sell land from its Borgata hotel in Atlantic City for $73 million to Vornado Realty Trust and Geyser Holdings. The Borgata land, which is co-owned with Boyd Gaming(BYD), is about 11.3 acres, which would translate into about $6.5 million per acre.
The transaction still needs to be approved by New Jersey regulators, and is expected to close by the fourth quarter. Once this transaction is complete, MGM will still own about 85 acres of developable land in Atlantic City.
Earlier in the year, MGM said it planned t! o divest its 50% stake in the Atlantic City casino, which is currently in trust. The casino operator is still in talks with potential buyers of Borgata casino, and hotel and investors will be waiting for an update on its progress when second-quarter earnings are released.
"We view this [deal] as a very modest positive in that there are still buyers of Atlantic City assets out there, at least at the right price," J.P. Morgan analyst Joseph Greff wrote in a note. "We don't necessarily interpret [the] news as any indication that MGM is closer to selling its 50% stake in Borgata."
- [By Hawkinvest]
MGM Resorts International (MGM) is one of the world's largest hotel and casino companies, based in Las Vegas. Since December, MGM shares have been trading in a range of about $9, to almost $15 per share. The stock is now at the upper limit of the recent trading range which means that the risk of holding or buying this stock right now, could be elevated. MGM shares have rallied with the markets but appear extended and vulnerable to a sell-off. The company has a heavy debt load and it has been reporting losses. The balance sheet has about $13.45 billion in debt and only about $1.97 billion in cash. MGM could be impacted by higher oil prices because many consumers could cut back on spending if they go to Las Vegas, and some might decide not to go at all, and instead opt for a "staycation." With MGM facing challenges and the shares near recent highs, it could make sen se to sell now and buy on dips later this year.
Here are some key points for MGM:
Current share price: $14.18
The 52 week range is $7.40 to $16.05
Earnings estimates for 2011: a loss of 53 cents per share
Earnings estimates for 2012: a loss of 39 cents per share
Annual dividend: none
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