On Aug 12, 2014, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on dissapointing second quarter
Why the Downgrade?
Last week, Melco Crown Entertainment posted weak second-quarter
2014 results, missing on both top and bottom line estimates.
Adjusted earnings of 30 cents per share missed the Zacks Consensus
Estimate of 37 cents by 18.9%. Further, earnings declined from the
year-ago figure of 35 cents by 12.4%. The downside reflects
In the quarter, net revenue declined 7.4% year over year to $1.20
billion and missed the Zacks Consensus Estimate of $2.59 billion by
9.4% due to lower group-wide rolling chip revenues, partially
offset by improved mass market table games revenues.
The downside reflects slowdown in gambling in Macau as high-stake
gamblers are curtailing spending due to a tepid Chinese economy.
Additionally, a nationwide crackdown on corruption in China
compelled Macau officials to impose restrictions on VIP gamblers to
stop billions of dollars from being siphoned off illegally from
mainland China to Macau. With the near-term outlook for gaming in
Macau remaining bleak, we anticipate the pressure to persist for
In fact, with the company's weak second quarter and the poor
outlook on Macau, the 2014 consensus earnings estimate went down
from $1.70 to $1.61 in the past 7 days and that for 2015 declined
from $2.08 to $2.01, over the same time period.
Other Stocks That Warrant a Look
Better-ranked stocks in the broader Leisure Services sector include
Marriott Vacations Worldwide Corp. (
), Choice Hotels International Inc. (
) and Wyndham Worldwide Corporation (
). All these stocks carry a Zacks Rank #2 (Buy).
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WYNDHAM WORLDWD (WYN): Free Stock Analysis
CHOICE HTL INTL (CHH): Free Stock Analysis
MELCO CROWN ENT (MPEL): Free Stock Analysis
MARRIOT VAC WW (VAC): Free Stock Analysis
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