EARNINGS PREVIEW: US Casinos Find Big Money Still In Macau
July 14 2011 - 10:46AM
Dow Jones News
TAKING THE PULSE: Rising visitor numbers, fatter margins and a
series of mostly positive decisions from government regulators are
expected to boost big casino operators' earnings this quarter,
adding momentum to the year's rebound. Those companies with
operations in Asia are seen performing especially well as Chinese
regulators ease some restrictions on visitors to Macau.
Higher revenue from U.S. resorts and casinos depends on a shaky
economic recovery, however, which could spell trouble for some
operators. Susquehanna says Las Vegas' recovery has slowed
dramatically as its busiest convention season ends and the city
becomes more dependent on the leisure market, making holdings
outside the gambling hub all the more important to companies'
results.
COMPANIES TO WATCH:
Wynn Resorts Ltd. (WYNN) - July 18
Wall Street Expectations: Analysts expect earnings of 99 cents a
share on $1.26 billion in revenue. A year earlier, the company
earned 42 cents a share, or 52 cents excluding write-downs, on
revenue of $1.03 billion.
Key Issues: Despite fierce competition, Wynn continues to cash
in on its booming business in Macau, the Chinese gambling Mecca
that reported a 52% jump in June gambling revenue compared with a
year ago. Fitch Ratings last week upgraded the luxury casino resort
operator, citing the Chinese special administrative region as a key
strength. In Las Vegas, Wynn's casino also seems to be pulling
ahead of its major competitors as convention visitors return in
larger numbers.
Penn National Gaming Inc. (PENN) - July 21
Wall Street Expectations: Analysts polled by Thomson Reuters
expect a per-share profit of 47 cents with $687 million in revenue.
A year earlier, the company reported a per-share profit of 9 cents,
or 29 cents excluding items such as asset write-downs, on $598.3
million in revenue.
Key Issues: The operator of casinos and horse racetracks in the
eastern U.S. has seen its revenue improve lately as consumer
spending stabilizes. The company reached an agreement to end
litigation with state authorities in Ohio over one of two planned
casinos there, while analysts have praised a joint venture with
auto racetrack operator International Speedway Corp. (ISCA, ISCB)
in Kansas City. Moody's Investors Service last month raised its
credit outlook for the company to positive, saying it expects Penn
will continue to perform well relative to its competitors.
Las Vegas Sands Corp. (LVS) - Expected July 28
Wall Street Expectations: The consensus calls for 44 cents a
share in earnings and $2.21 billion in revenue. Including the
impact from preferred dividends, Sands posted a penny-per-share
loss a year ago--a profit of 17 cents excluding preopening costs
and other impacts--with revenue minus certain promotional
allowances at $1.59 billion.
Key Issues: Despite its name, the company already generates most
of its revenue in Asia. Sterne Agee says the chain's new casino in
Macau's highly desirable Cotai area "should instantly leverage the
largest existing mass gaming database in Macau" and turn
day-trippers to overnighters with affordable hotel rooms, which are
in short supply there. Results have also benefited from improving
performance at Las Vegas Sands' Marina Bay Sands resort.
Boyd Gaming Corp. (BYD) - Expected Aug. 1
Wall Street Expectations: The Street sees a per-share profit of
2 cents and $579 million in revenue. A year earlier, the company
earned 4 cents a share, or 5 cents excluding items, on $578.5
million in revenue.
Key Issues: Boyd has struggled amid an uneven economic recovery
in the U.S. as revenue remains soft in Las Vegas. One of Sin City's
oldest gambling companies, the geographically diverse casino
operator has benefited in recent quarters from its half stake in
the Borgata in Atlantic City, N.J. A $288 million deal for a
Mississippi resort and spa is expected to further bolster the
company's top line in the long run, but it could add to its already
burdensome costs in its fiscal second quarter.
MGM Resorts International (MGM) - Expected Aug. 3
Wall Street Expectations: Analysts polled by Thomson Reuters
expect a loss of 13 cents a share on $1.59 billion in revenue. The
company posted a year-earlier loss of $2 a share--35 cents
excluding write-downs--and $1.54 billion in revenue.
Key Issues: Earnings will benefit from a recently launched joint
venture in Macau with Pansy Ho, the daughter of local gambling
tycoon Stanley, after an agreement reached earlier this year.
Morgan Stanley also sees the company benefiting from improving
leisure trends at its properties in Las Vegas, but it will take
time for adjusted earnings to return to peak levels.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;
Andrew.FitzGerald@dowjones.com
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