The global economic backdrop has been lackluster in 2011, but business in the casino industry has continued to hum along. Most of the major players have experienced slightly positive growth in the U.S., but have been looking to Macau, China for their big money. Here is a rundown of the year in casino stocks.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.
Las Vegas Sands (NYSE:LVS) has been having a remarkable year on a fundamental basis, and it recently announced a record quarter that included a 61.8% year-over-year improvement in adjusted diluted earnings per share on a 26.2% pop in net revenue. In the third quarter, the company's Macau business segment accounted for slightly more than half of its total operating income. LVS' share prices have fallen 4.3% since the beginning of the year. (To know more about EPS, read How To Evaluate The Quality Of EPS.)
MGM Resorts International (NYSE:MGM) began consolidating MGM China this past summer and this segment of the company's operations has been heating up. MGM China has seen its cash flow, before branding fees, increase approximately 80% on a year-over-year basis. With $13.6 billion in debt, MGM is looking for improving cash flow metrics so that it can shore up its balance sheet. Investors have remained skeptical and have pushed the stock 32.5% lower year to date.
Another heavy-hitter that has been raking in revenue from its Macau operations is Wynn Resorts (Nasdaq:WYNN). Net revenue for the company's third quarter spiked 30% over the year-ago quarter with the majority of the advance driven by Wynn Macau. Shares of WYNN are up 13% year to date.
Although it does not have operations overseas, Penn National Gaming (Nasdaq:PENN) has been able to churn out double-digit revenue growth for much of 2011. The company's results have benefited from the acquisition of M Resort in Las Vegas as well as the opening of its Hollywood Casino Perryville facility last fall. PENN shares are up 2.7% year to date. (To know more about acquisitions, read Analyzing An Acquisition Announcement.)
Ameristar Casinos (Nasdaq:ASCA) has been posting slightly positive net revenue and adjusted EBITDA growth this year. This trend has held up for each of the last four quarters, and margins have been on the rise. The company has succeeded in keeping operating costs in check and cutting back on promotional allowances. Shares of ASCA have risen 18.2% in 2011.
It has been a rough year for shareholders of Boyd Gaming (NYSE:BYD). The casino operator issued fourth quarter EBITDA guidance that was below analysts' estimates. Boyd's revenue growth has been flat in 2011 and its $2.8 billion debt has been a cause for concern among analysts. BYD shares have tanked to the tune of 40% so far this year.
The Bottom Line
2011 has brought a mixed bag of developments for the casino and gaming industry. Companies with exposure to Macau have been reaping major top line gains. There has been year-over-year growth in the U.S., but the advances have been harder to come by given an already saturated market. The sector, as a whole, should be able to carry its positive momentum well into next year, and players with operations in Asia will cash in on this upside potential.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Billy Fisher did not own shares in any of the companies mentioned in this article.