The last week marked the final stretch of earnings for the gambling industry. Melco Crown Entertainment Limited MPEL posted dismal second quarter 2015 results with its earnings missing the Zacks Consensus Estimate for the fifth consecutive quarter and revenues lagging the same for the third consecutive quarter. After posting losses since Dec 2010, Caesars Entertainment Corporation CZR posted profits in the second quarter. It also beat the consensus mark after missing it for eight consecutive quarters.
While MGM Resorts International MGM beat the Zacks Consensus Estimate on both the counts, Century Casinos Inc. CNTY posted mixed results with earnings beating the consensus mark and revenues missing the same. In one other development, rolling chip turnover at Iao Kun Group Holding Company Limited IKGH fell for the tenth consecutive month. (Read earlier development: Gambling Stock Round Up for Aug 3, 2015).
As most of the companies have already reported their quarterly results, let us take a quick look at their performance.
|
Company |
Earnings Surprise% |
Revenue Surprise% |
|
WYNN |
-23.7% |
-2.5% |
|
LVS |
-1.6% |
-1.5% |
|
MGM |
54.5% |
0.8% |
|
MPEL |
-11.1% |
-9% |
|
CACQ |
-70% |
N/A |
|
BYD |
140% |
1.8% |
|
CZR |
225% |
N/A |
|
CHDN |
-9.4% |
1.6% |
|
PENN |
-30.8% |
3.4% |
|
PNK |
5.1% |
2.3% |
|
CNTY |
145.5% |
-5.6% |
|
MCRI |
7.4% |
2.7% |
Recap of the Week’s Important Stories:
1. Melco Crown posted dismal second quarter 2015 results wherein adjusted earnings of 8 cents per American Depository Share (ADS) missed the Zacks Consensus Estimate of 9 cents by 11.1%. Further, earnings declined 72% year over year. The downside reflects a significant decline in revenues. In the quarter, net revenue plunged 23.6% year over year to $916.0 million and also missed the consensus mark of $1,007 million by 9%. The sluggish revenues reflect lower group-wide rolling chip revenues and mass market table games revenues. However, these declines were partially offset by revenues generated at City of Dreams Manila. (Read: Weak Macau Weighs on Melco Crown's Earnings & Revenues)
2. MGM Resorts posted better-than-expected second quarter 2015 results with earnings of 17 cents (including pre-opening and start-up expenses) beating the Zacks Consensus Estimate of 11 cents by 54.5%. However, it declined 19% year over year. Lower revenues were partially offset by a decline in expenses.
Total revenue of $2.39 billion beat the Zacks Consensus Estimate of $2.37 billion by 0.8%. However, it fell 7.6% year over year. The downside reflects a significant decline in revenues from MGM China. The company announced a Profit Growth Plan to boost its EBITDA and also declared that it expects an upside in the third quarter. (Read: MGM Resorts Up on Earnings, Revenue Beat; Both Down Y/Y)
3. Century Casinos posted mixed second quarter 2015 results with adjusted earnings per share of 27 cents comprehensively beating the Zacks Consensus Estimate of 11 cents and increasing from 1 cent earned in the prior-year quarter. The upside reflects an increase in revenues and a decline in total operating costs and expenses.
Net revenue of $37.9 million missed the consensus mark of $40 million by 5%. However, it went up 20% year over year. The results reflect an increase in revenues in the U.S and Canada, partially offset by a decline in Poland.
4. Caesars Entertainment posted second quarter 2015 results with earnings of 10 cents per share that compared favorably with the Zacks Consensus Estimate of a loss of 8 cents and the year-ago loss of $3.24 per share. Total revenue from continuing operations of $1.14 billion went up 17.4% year over year mainly due to strong performance of its subsidiary Caesars Interactive Entertainment (CIE), the openings of Horseshoe casino in Baltimore and The Cromwell hotel and casino. Also, the renovation of The LINQ Hotel & Casino drove revenues. Adjusted EBITDA grew 55.6% year over year to $347 million, primarily driven by marketing and operational efficiencies.
Meanwhile, Caesars Acquisition Company CACQ posted earnings of 6 cents that missed the Zacks Consensus of 20 cents by 70%. However, it remained flat year over year. Caesars Acquisition Company was formed to make an equity investment in Caesars Growth Partners, LLC, a joint venture between Caesars Acquisition Company and Caesars Entertainment Corporation.
5. Iao Kun Group Holding posted weak Rolling Chip Turnover for the month of Jul 2015. Rolling Chip Turnover is used by casinos to measure the volume of VIP business transacted and represents the aggregate amount of non-negotiable chips players purchase. Iao Kun Group’s Rolling Chip Turnover of $0.44 billion fell 72% year over year, marking the tenth consecutive monthly decline. Win rate for the month of Jul 2015 was 4.52%. Iao Kun Group is engaged in the promotion of five major luxury VIP gaming facilities in Macau exposes it to the sluggish economic conditions in the region.
Share Price Performance
Last week proved to be quite positive in terms of share price movement with the highest increase of 15.8% at Melco Crown, followed by 11.8% increase at MGM Resorts. However, only Boyd Gaming Corporation BYD experienced a decline of 0.6%.
Over the last six months, share price of most of the gambling stocks lost value with Caesars Entertainment experiencing the highest decline of 38%, followed by Wynn Resorts Ltd. that experienced a decline of approximately 28.1%. However, Boyd Gaming, Las Vegas Sands Corp. and MGM Resorts gained over the same time frame.
|
Company |
Last Week |
Last 6 months |
|
WYNN |
2.8% |
-28.1% |
|
LVS |
2.8% |
5.1% |
|
MGM |
11.8% |
11.2% |
|
MPEL |
15.8% |
-.6.6% |
|
CACQ |
8.7% |
-11.6% |
|
BYD |
-0.6% |
24.5% |
|
CZR |
27% |
-38% |
What’s Next in the Gambling World?
We note that gambling stocks have oscillated between gains and losses in recent sessions and investors can expect this volatile movement to continue in the coming days as well.
Full House Resorts Inc. is expected to report its second quarter results on Aug 12.
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