Last week, share price of Isle of Capri Casinos, Inc. (ISLE) plunged after the company announced a few changes in management. Further, Pinnacle Entertainment Inc. (PNK) provided an estimate for its consolidated adjusted EBITDA and income from continuing operations for the second quarter. Full House Resorts Inc. (FLL) was named the casino operator for the upcoming Howe Caverns Resort and Casino project as well as Grand Hudson Casino and Resort in New York.
Meanwhile, Penn National Gaming, Inc. and The Cordish Companies announced establishment of five marquee dining restaurants at their $750.0 million Live! Hotel & Casino New York. In one other development, the ticket prices of the High Roller Ferris Wheel at the Caesars Entertainment Corporation’s The Linq complex were reportedly lowered. (Read last to last week’s developments: Gambling Stock Round up for Jul 7, 2014).
Recap of the Week’s Important Stories:
1. Isle of Capri Casinos shares fell approximately 13.5% on Jul 11 on the announcement of management changes. These changes come in the wake of an ongoing profit improvement program. Of late, the company has been underperforming due to stiff competition. We note that on Jul 3, 2014, Isle of Capri shares had surged on rumors of the company being acquired by Gaming and Leisure Properties. The recent slump in share price can be attributed to the management changes, which have led investors to believe that a takeover is not in the offing.
The company eliminated Jim Perry from the position of executive chairman of the board of directors. However, he continues to act as a member of the board. Meanwhile, Robert Goldstein has been named as non-executive chairman of the board of directors. Eric Hausler will replace Dale Black as the chief financial officer. Also, the company has eliminated several other senior positions. Going forward, the company expects annual corporate expense to be reduced by approximately $2.5 million due to these actions.
2. Pinnacle Entertainment announced that its consolidated adjusted EBITDA and income from continuing operations for the second quarter would include unusual expense items in the range of $8.0 million to $10.0 million. These unusual expense items are related to the rollout of the company's mychoice player loyalty program at its Ameristar branded properties, Colorado lobbying expenses, and severance expense.
3. Full House Resorts was named as the casino operator for the upcoming Howe Caverns Resort and Casino project as well as the Grand Hudson Casino and Resort in New York. The company will look after the development and management of both these projects. Howe Caverns Resort and Casino had recently filed a request to the New York State Gaming Commission for a gaming license. Meanwhile, The New Windsor Casino and Resort LLC had filed its formal application with the New York State Gaming Commission for gaming license to develop the Grand Hudson Casino and Resort.
4. Penn National Gaming and The Cordish Companies announced establishment of five marquee dining restaurants at Live! Hotel & Casino New York. These include 2 Bobby Flay eateries and 1 Smorgasburg, The Cheesecake Factory Incorporated and Fornino restaurant each. Penn National Gaming is developing The Live! Hotel & Casino New York casino in partnership with the Cordish Companies in Orange County, N.Y. The company had provided a detailed update on the same on Jun 16, 2014. (Read More: Gambling Stock Roundup: Isle of Capri, Penn National and Melco Crown Dominated Headlines)
5. Reportedly, ticket prices of the High Roller Ferris wheel at Caesars Entertainment’s The Linq complex were lowered in order to increase traffic. The High Roller is a part of the $550 million construction project called The Linq. Located in Las Vegas, the Linq complex is an open-air retail, dining and entertainment district. High Roller was opened on Mar 31, 2014 with huge expectations. However, demand remained low due to the sluggish U.S. market and the debt-ridden company had to lower ticket prices. Since its leverage buyout in 2008, by Apollo Global Management and TPG Capital, the company has struggled to recover completely from recession and has not posted profits since 2009.
Performance
The past week turned out to be unfavorable for most of the casino operators. Per Bloomberg, Macau’s prospects face threats from China's slowing economy. Following this report, share prices of leading U.S. based casino operators who earn a better part of their revenue from Macau declined. Melco Crown Entertainment Limited (MPEL) declined the most (10.5%) followed by MGM Resorts International (MGM), Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS). (Read More: Shares of Melco Crown Plunge on China Slowdown)
Also, shares of Caesars Entertainment and Caesars Acquisition Company declined 7.7% and 1.2% as the debt-ridden companies continue to struggle to recover completely from recession. Also, shares of Boyd Gaming Corporation declined 9.9%.
Over the last six months, MGM Resorts and WYNN Resorts were the big gainers with 5.8% and 3.7% price increases, respectively. However, Caesars Entertainment and Melco Crown lost 21.9% and 13.3%, respectively, over the same time frame.
|
Company |
Last Week |
Last 6 months |
|
WYNN |
-4.33% |
3.66% |
|
LVS |
-4.29% |
-2.04% |
|
MGM |
-4.81% |
5.84% |
|
MPEL |
-10.45% |
-13.26% |
|
CACQ |
-1.16% |
-9.10% |
|
BYD |
-9.86% |
1.46% |
|
CZR |
-7.65% |
-21.86% |
What’s Next in the Gambling World?
Las Vegas Sands, with an Earnings ESP of -1.12% and Zacks Rank #3 (Hold), is set to release its second quarter 2014 results on Jul 16, 2014. We note that gambling stocks have oscillated between gains and losses in recent sessions and investors can expect such movement in the coming days as well.
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