Gambling Stock Roundup: Las Vegas Sands, Wynn Resorts Q4 Earnings in Focus

Last week was a big one for the gambling industry, as major casino operators Las Vegas Sands Corp. LVS and Wynn Resorts Ltd. WYNN kick-started fourth-quarter 2016 earnings.

Wynn Resorts results were mixed as its earnings lagged the Zacks Consensus Estimate while revenues beat the consensus mark. On the other hand, Las Vegas Sands lagged on both fronts.

Apart from this, Eldorado Resorts, Inc.'s ERI pending acquisition of Isle of Capri Casinos, Inc. ISLE got the approval from shareholders of both companies.

Gaming Industry 5YR % Return

Gaming Industry 5YR % Return

Recap of the Week's Most Important Stories

1. Las Vegas Sands' fourth-quarter earnings of 62 cents lagged the Zacks Consensus Estimate of 65 cents by 4.6%. Meanwhile, the figure remained flat on a year-over-year basis.

Quarterly net revenues of $3.08 billion came below the Zacks Consensus Estimate of $3.15 billion by over 2%, but increased 7.4% year over year due to a somewhat better performance in Macao. On a consolidated basis, adjusted property EBITDA increased 6.1% year over year to $1.12 billion during the quarter owing to higher revenues.

This Zacks Rank #3 (Hold) company stated that its Macao portfolio experienced strong visitation and higher hotel occupancy rates. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Thus, though the operating environment in Macao continues to improve, a complete rebound in the region will take time as is evident from Las Vegas Sands' lower-than-expected Q4 results (read more: Las Vegas Sands Misses on Q4 Earnings, Stock Down ).

2. Wynn Resorts posted earnings of 50 cents per share in the fourth quarter, missing the Zacks Consensus Estimate of 67 cents by 25.4%. Further, earnings decreased 35% year over year mainly due to a lower operating income margin.

Net revenue of $1.30 billion surpassed the Zacks Consensus Estimate of $1.25 billion by 4%. Moreover, revenues increased 37.3% on the back of the Wynn Palace opening, partly offset by lower revenues from Wynn Macau and unfavorable performance by the company's Las Vegas Operations (read more: Wynn Resorts Stock Up Despite Earnings Miss in Q4 ).

3. In Sep 2016, Eldorado Resorts reached an agreement to buy the regional gaming operator Isle of Capri Casinos. The total value of the deal between Eldorado and Isle of Capri stands at $1.7 billion, including the latter's long-term debt of $929 million. Recently, at separate Special Meetings of shareholders, certain actions in connection with the transaction received approval from the shareholders of both companies.

Notably, both companies are in the procedure of acquiring all obligatory approvals for the planned transaction, which is expected to close in the second quarter of 2017. Upon completion, Isle of Capri shareholders will own about 38% of the combined entity's outstanding shares. Meanwhile, the combination of Eldorado and Isle of Capri is likely to create a regional player with 20 casino resorts across 10 states.

Price Performance

The following table shows the price movement of the major gambling stocks over the past week and the last six months:

Company Last Week Last 6 Months
WYNN 11.3% -1.5%
LVS -3.9% 5.0%
MGM 4.5% 22.9%
MPEL 3.4% 28.8%
MCRI 3.4% 2.9%
CACQ 0.0% 39.1%
BYD 6.7% 4.8%

Over the last five trading sessions, share price movement of the major gambling stocks was predominantly positive. Wynn Resorts gained the maximum of 11.3% followed by Boyd Gaming Corporation's BYD and MGM Resorts International's MGM rise of 6.7% and 4.5%, respectively. However, shares of Las Vegas Sands lost 3.9% value in the same time period.

Over the last six months also, the price performance of gambling stocks has been largely positive. Among the stocks that appreciated the most were Caesars Acquisition Company CACQ and Melco Crown Entertainment Limited MPEL that gained 39.1% and 28.8%, respectively. On the contrary, Wynn Resorts recorded a decline of 1.5% over the same time frame.

What's Next in the Gambling Space?

We note that gambling stocks have raked in considerable gains in recent sessions. However, with the earnings season well under way, investors can expect some volatility in the coming days.

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Las Vegas Sands Corp. (LVS): Free Stock Analysis Report

Wynn Resorts, Limited (WYNN): Free Stock Analysis Report

MGM Resorts International (MGM): Free Stock Analysis Report

Boyd Gaming Corporation (BYD): Free Stock Analysis Report

Melco Crown Entertainment Limited (MPEL): Free Stock Analysis Report

Isle of Capri Casinos, Inc. (ISLE): Free Stock Analysis Report

Eldorado Resorts, Inc. (ERI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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