EARNINGS PREVIEW: Casinos' Growth Still On A Streak
27 January 2012 - 4:31AM
Dow Jones News
TAKING THE PULSE: Most U.S. casino operators have posted
stronger results over the past year as the number of visitors
streaming into Las Vegas gradually improves. Companies with casinos
in the Chinese gambling enclave of Macau are meanwhile seeing a
windfall from highly lucrative VIP visits, which account for nearly
75% of all gambling revenue in the city. Macau gambling revenue
rose 25% last month, capping off a year in which revenue soared
42%. Bears remain wary of those numbers, warning the VIP market's
explosive growth is unsustainable, but for now the island gambling
mecca remains on a tear.
COMPANIES TO WATCH:
Las Vegas Sands Corp. (LVS) - Feb. 1
Wall Street Expectations: Analysts' average estimate calls for a
56-cent per-share profit with $2.46 billion in revenue. Sands last
year posted a profit of 34 cents a share, or 42 cents excluding
certain charges, with revenue minus certain promotional allowances
at $2.02 billion.
Key Issues: Despite its name, Las Vegas Sands has invested
heavily in Asia and now generates most of its revenue there. The
company is poised to benefit from a growing relationship with
Chinese VIP junket operators, who drive a big chunk of Macau's
gambling revenue. Moody's Investors Service also points out a trump
card in Sands' presence in Singapore--the company operates one of
only two casinos in the country--where gambling revenue continues
to surge, helped by limited competition. Yet advisory firm Janney
warned in a note to clients that the company's long-term growth
could be marred by "choppier growth going forward," partly due to
Macau's unpredictable nature.
Penn National Gaming Inc. (PENN) - Feb. 2
Wall Street Expectations: The consensus calls for a 49-cent
per-share profit and $675 million in revenue, according to a survey
by Thomson Reuters. A year earlier, the company reported a $1.97
per-share loss--a 30-cent profit excluding stock-based
compensation, asset write-downs and other items--on $630.2 million
in revenue.
Key Issues: Penn National's regional gambling business remains
vulnerable to weak U.S. employment growth, and its casinos outside
Las Vegas could also face cannibalization from nearby properties.
At the same time, some analysts suggest fourth-quarter gambling
revenue could stage a stealthy comeback. The company will also see
added revenue from its recently acquired M Resort in Las Vegas.
Wynn Resorts Ltd. (WYNN) - Expected Feb. 8
Wall Street Expectations: Analysts expect a $1.28 per-share
profit and $1.36 billion in revenue. A year earlier, the company
earned 91 cents and $1.24 billion, respectively.
Key Issues: Worries about a slowdown in the pace of growth in
Macau pressured Wynn's stock throughout November. An escalating
battle between Chairman and Chief Executive Steve Wynn and business
partner Kazuo Okada, who owns the largest amount of shares at about
20%, has also distracted investors. Wynn's bottom line will still
benefit in the fourth quarter from its exposure to Macau, however,
and the company's high-end Las Vegas properties are generating more
revenue from a rebounding convention business.
MGM Resorts International (MGM) - Expected Feb. 16
Wall Street Expectations: Analysts polled by Thomson Reuters
expect a loss of 18 cents a share on $2.17 billion in revenue. The
company last year posted a loss of 29 cents a share--20 cents
excluding write-downs--with net revenue at $1.47 billion.
Key Issues: Analysts point to encouraging growth trends in MGM's
revenue per available room, a key hotel metric and an indicator
that its Las Vegas casino resorts saw hotel room rates and
occupancy improve following deep falls during the economic
downturn. Charges tied to the company's CityCenter joint venture on
the Strip have weighed down earnings in the past, but Moody's
Investors Service has noted the property delivered
better-than-expected results through the third quarter.
Boyd Gaming Corp. (BYD) - Expected Feb. 28
Wall Street Expectations: Wall Street sees a penny per-share
loss and $593 million in revenue. A year earlier, the company
earned a profit of 8 cents a share, or 5 cents excluding items such
as preopening expenses and debt-retirement impacts, on $551.9
million in revenue.
Key Issues: Some of Boyd's regional casinos could benefit from a
rebound in consumer spending, and the company has expanded its
holdings with a recent acquisition in Biloxi, Miss. At the same
time, Boyd's local Las Vegas casinos have struggled, and its
Borgata property in Atlantic City faces increased competition for a
still-weak share of the regional market. The company in November
terminated an $80 million agreement to sell its Dania Jai-Alai
venue and casino in Florida after buyers were unable to close the
deal within the required period, leaving Boyd burdened with another
drag on its earnings.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;
Andrew.FitzGerald@dowjones.com
PENN Entertainment (NASDAQ:PENN)
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