The previous week saw the last stretch of earnings announcements for the gambling industry and turned out to be quite positive for most of the players. Monarch Casino & Resort Inc. MCRI beat the Zacks Consensus Estimate for both earnings and revenues for the sixth consecutive quarter, and Churchill Downs Inc. CHDN posted better-than-expected fourth-quarter results.
Meanwhile, Caesars Entertainment Corp. CZR incurred wider-than-expected loss in the quarter, while revenues beat the same. St. Louis, MO-based Isle of Capri Casinos, Inc. ISLE too posted dismal fiscal third-quarter results.
In a separate development, Pinnacle Entertainment Inc. PNK received approval from the Indiana Gaming Commission for the Gaming and Leisure Properties, Inc. (GLPI) deal.
Recap of the Week’s Important Stories:
Array. Monarch Casino & Resort’s shares moved up in response to better-than-expected fourth-quarter and full-year results. Earnings per share of 29 cents beat the Zacks Consensus Estimate by more than 26% and jumped 32% year over year. The upside came on the back of improved revenues and a decline in interest expenses.
Net revenue of $5Array.5 million also beat the Zacks Consensus Estimate by more than 4% and increased Array2% year over year backed by solid revenue growth at Atlantis Casino Resort Spa and Monarch Black Hawk. Casino, food and beverage, hotel and other revenues showed year-over-year growth.
The company continued with the expansion of Monarch Black Hawk into a full-scale casino resort to capitalize on the Denver metropolitan area's strong economic environment. Post renovation, the project will feature a hotel tower with approximately 500 rooms and roughly double the existing casino’s size. Currently, the company expects total costs in the range of $395 million to $407 million, out of which $Array40 million has already been spent through Dec 3Array, 20Array5.
2. Churchill Downs also posted better-than-expected fourth-quarter 20Array5 results. Adjusted earnings of 43 cents per share beat the Zacks Consensus Estimate of 42 cents by 2%. In the year-ago period, the company suffered a loss of 66 cents. The upside reflects an increase in revenues and a decline in selling, general and administrative expense. Net revenue of $272 million beat the consensus mark by over 3% and jumped almost 62% year over year.
The company’s quarterly results reflect Churchill Downs’ purchase of Seattle-based Big Fish Games Inc., a PC and mobile video game company in 20Array4-end. Revenues from the Big Fish games segment were $4Array3.7 million in the reported quarter, compared with the $Array3.9 million generated a year ago. Net revenue also benefited from an increase in TwinSpires segment and organic growth at the Oxford Casino property. Apart from this, the Kentucky Oaks and Derby week contributed to the record revenues.
3. On the other hand, Caesars Entertainment’s fourth-quarter loss of 32 cents was wider than the Zacks Consensus Estimate of a loss of Array4 cents. However, net revenue of $Array.ArrayArray billion beat the consensus mark of $Array.08 billion by 3.6%. The revenue beat mainly reflects higher hotel revenues, with increased cash ADR in Las Vegas, and improved marketing and operational efficiencies.
4. Isle of Capri Casinos too reported dismal fiscal third-quarter results with earnings of Array7 cents falling short of the Zacks Consensus Estimate of 20 cents by Array5%. Revenues of $23Array million, also fell short of the Zacks Consensus Estimate of $24Array million by 4%. Challenging weather conditions led to a revenue decline in almost all the properties of the company.
5. Pinnacle Entertainment announced that the Indiana Gaming Commission has approved the agreement with Gaming & Leisure Properties, announced in July last year.
On July 2Array, 20Array5, the aforementioned companies announced a transaction in which Pinnacle Entertainment would spin off its operating business and Belterra Park Gaming & Entertainment Center into a separate publicly traded company and the remainder of the real estate assets will be acquired by Gaming & Leisure Properties. Pinnacle shareholders will receive a fixed exchange ratio of 0.85 of a share of Gaming & Leisure Properties for each Pinnacle common share, in addition to one share of the new company.
The company intends to complete the transaction soon following the receipt of approval from shareholders and remaining regulators.
After the close of the transaction, Pinnacle will operate the leased gaming facilities under a triple-net Master Lease agreement with Gaming & Leisure Properties and pay an initial annual rent of $377 million.
Performance
The last week did not witness a lot of share price movement. Some companies such as Caesars Acquisition Company CACQ and Melco Crown Entertainment Ltd. MPEL lost 9.84% and 0.5% value over the five trading sessions. However, Boyd Gaming Corp. BYD and Caesars Entertainment gained over the same time frame.
Over the last six months, share prices of some of the gambling stocks decreased, with Caesars Acquisition declining the most — Array8.52% — followed by Array3.5Array% drop recorded by Melco Crown. However, Boyd Gaming, Wynn Resorts Ltd. WYNN and Caesars Entertainment gained over the same time period.
|
Company |
Last Week |
Last 6 Months |
|
WYNN |
4.62% |
4.65% |
|
LVS |
2.94% |
Array.40% |
|
MGM |
3.45% |
-8.Array3% |
|
MPEL |
-0.50% |
-Array3.5Array% |
|
CACQ |
-9.84% |
-Array8.52% |
|
BYD |
5.76% |
9.9Array% |
|
CZR |
22.63% |
3.90% |
What’s Next in the Gambling World?
We note that gambling stocks have seen both gains and losses in the recent sessions and with the earnings season nearing the end investors can expect this volatility to continue in the coming days.
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