The biggest issue ahead is the debt crisis afflicting members of the European single currency.
Failure to solve it so far has tipped the financial markets and the global economy into dangerous territory and the big worry is that political leaders will not be able to fix it, threatening to blow the euro apart with potentially disastrous consequences.
Meanwhile, parts of the world economy remain strong, notably China and India, while the US is recovering slowly and the UK is flirting with recession.
For stockpickers this will be one of the trickiest years in recent times, so we have gone for shares in companies we think could prosper even in difficult conditions.
As ever, it is not intended to be a balanced portfolio. In this climate investors would usually take more notice of dividend income and would not restrict themselves to an artificial 12 months time limit.
Aviva (300¾p) The insurer’s shares have been hit by fears over its exposure to the eurozone and uncertainty over new solvency rules. But insurance companies have so far managed risk better than banks and Aviva is moving to further bolster an already solid capital position. The dividend yield is also very healthy.
Best Casino Stocks In 2013:Melco Crown Entertainment Limited (MPEL)
Melco Crown Entertainment Limited, through its subsidiaries, engages in the development, ownership, and operation of casino gaming and entertainment resort facilities primarily in Macau. It owns and operates City of Dreams, an integrated resort development, which features approximately 400 gaming tables and 1,300 gaming machines; guest rooms; a stage performance theater; approximately 20 restaurants and bars, 69 retail outlets, and an audio visual multimedia experience; and recreation and leisure facilities, including health and fitness clubs, swimming pools, spa and salons, and banquet and meeting facilities. The company also operates Altira Macau that features approximately 228 gaming tables; hotel rooms consisting of suites and villas, and in-room entertainment and communication facilities; restaurants and dining facilities; and non-gaming entertainment venues, including a spa, gymnasium, outdoor garden podium and a sky terrace lounge. In addition, it owns and operates Mocha Clubs, which provide single player machines with various games consisting of progressive jackpots, as well as multi-player games where players on linked machines play against each other in electronic roulette, baccarat, and sicbo; Taipa Square Casino that features approximately 31 gaming tables servicing mass market patrons. The company was formerly known as Melco PBL Entertainment (Macau) Limited and changed its name to Melco Crown Entertainment Limited in May 2008. Melco Crown Entertainment Limited was incorporated in 2004 and is based in Central, Hong Kong.Advisors' Opinion:
By Jeanine Poggi At 2011-10-27
Melco Crown Entertainment(MPEL) benefited in 2010 from being the only pure-play on Macau gaming, with shares rising about 56% for the year.
But Bain says that the valuation disconnect between Melco and other U.S. gaming operators with exposure to Macau is still too great, and investors are overlooking near-term catalysts.
One of these potential tailwinds is Melco's plans to open about three VIP facilities by the end of the year. The VIP arena is expected to be the biggest area of growth in Macau in 2011, which bodes well for Melco. The casino operator is also opening a new caf and poker room at its flagship City of Dreams property in the first quarter next year.
As a result, Melco is one of Bain's top picks for 2011.
In its third quarter, Melco reported a surprise profit of 3 cents a share, as revenue ballooned 75% to $504 million. City of Dreams generated a profit of $114.9 million, compared with $46.6 million in the year prior.
At the end of the third quarter, Melco had $660 million in cash and about $2 billion in debt.
By Skousen At 2011-10-27
Melco Crown Entertainment's(MPEL) second quarter had some distractions, but overall there appear to be some underlying improvements.
During the quarter, the Macau-based casino operator lost $30.1 million, or 6 cents a share, compared with a loss of $144 million, or 30 cents, in the year-ago period. Analysts were calling for a loss of 4 cents a share for Melco.
Revenue surged to $573.6 million from $215.8 million last year. Melco received a boost from improvements at its Altria casino, and by having a full quarter of earnings contribution from its City of Dreams flagship.
Melco shares took a hit after the report. Melco said earnings should be adjusted for $9 million non-recurring provision and theoretical hold.
"This and a few other quarterly reports from Melco have come with an explanation, such as above, and our sense is that some investors are fatigued by that," Bain wrote. "We believe investors are being overly punitive to shares based on issues that have historically plagued results to a much larger degree.... We believe Melco's earnings are much less influenced by hold and other variables than they previously were."
Melco also announced that Greg Hawkins, president of its flagship City of Dreams casino resort, has resigned, and that the company will restructure its management, creating co-chief operating officers positions.
Ted Chan, president of the company's Altira Macau property, has been promoted to Co-Chief Operating Officer of Gaming, and will oversee gaming activities. Nick Naples, formerly Consulting Executive Vice President at Sands China, has been named Co-Chief Operating Officer of Operations and will manage all non-gaming operating activities for the company.
Both will report to Lawrence Ho, son of casino magnate Stanley Ho, and Co-Chairman and Chief Executive Officer at Melco.
Best Casino Stocks In 2013:Ameristar Casinos Inc. (ASCA)
Ameristar Casinos, Inc. operates as a gaming and entertainment company in the United States. The company develops, owns, and operates casino, and related hotel, food and beverage, entertainment, and other facilities. It primarily offers slot plays, as well as a range of table games, including blackjack, craps, roulette, and poker. The company?s signature dining concepts include steakhouses, buffets, and casual dining restaurants with sports bars. As of May 6, 2011, it operated a portfolio of eight casinos in seven markets, including Ameristar Casino Resort Spa St. Charles serving greater St. Louis, Missouri; Ameristar Casino Hotel Kansas City serving the Kansas City metropolitan area; Ameristar Casino Hotel Council Bluffs serving Omaha, Nebraska and southwestern Iowa; Ameristar Casino Resort Spa Black Hawk serving the Denver metropolitan area; Ameristar Casino Hotel Vicksburg serving Jackson, Mississippi and Monroe, Louisiana; Ameristar Casino Hotel East Chicago serving the Chicagoland area; and Cactus Petes Resort Casino and The Horseshu Hotel and Casino in Jackpot, Nevada. The company was founded in 1954 and is based in Las Vegas, Nevada.Advisors' Opinion:
By Conrad At 2011-10-27
Ameristar Casinos(ASCA) was singing "St. Louis Blues" as it swung to a loss in its second quarter.
The casino operator faces significant pressure in St. Louis from Pinnacle Entertainment's(PNK) new River City property, which opened in March.
During the quarter, Ameristar lost $24.9 million, or 43 cents a share, compared with a profit of $14.3 million, or 25 cents, in the year-ago period.
Excluding a negative impact related to Ameristar's casino in East Chicago, Ind., where a bridge that is closed is impacting revenue, it earned 13 cents per share, still less than the 20 cents analysts' estimated.
Revenue dropped 5% to $293 million from $308.9 million.
"While Ameristar is cheap on a relative valuation basis, we believe competition and challenges in East Chicago, coupled with a lack of visible positive catalysts, will keep the stock range-bound in the near to mid-term," J.P. Morgan analyst Joseph Greff wrote in a note.
By Zacks At 2011-10-24
Ameristar Casinos, Inc. (ASCA) advanced 24% during November. The company reached a 52-week high on Nov 20 due to takeover speculation following the unexpected death of Chairman, CEO and majority shareholder Craig H. Neilsen on Nov 19. Mr. Neilsen’s stock in Ameristar will be transferred to his private foundation, The Craig H. Neilsen Foundation, which is primarily focused on spinal cord injury research and treatment. The company’s Board elected President John M. Boushy as the new CEO.
Ameristar Casinos is a leading Las Vegas-based gaming and entertainment company known for its premier properties characterized by innovative architecture, state-of-the-art casino floors and superior dining, lodging and entertainment offerings.
Best Casino Stocks In 2013:Las Vegas Sands Corp. (LVS)
Las Vegas Sands Corp., together with its subsidiaries, owns, develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore. It owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and The Sands Expo and Convention Center in Las Vegas, Nevada; and the Sands Macao, The Venetian Macao Resort Hotel, the Plaza Casino, and the Four Seasons Hotel Macao, Cotai Striptm in Macau, the People?s Republic of China. The company also owns and operates Marina Bay Sands in Singapore; and the Sands Casino Resort Bethlehem in Bethlehem, Pennsylvania. Las Vegas Sands Corp. was founded in 1988 and is based in Las Vegas, Nevada.Advisors' Opinion:
By Jeanine Poggi At 2011-10-27
It's no surprise Las Vegas Sands(LVS) was the biggest winner of 2010, with shares surging 162% for the year.
Macau and Singapore have become Sands' trump cards, as Macau is on track to report 50% plus growth in gaming revenue in 2010, and analysts expect Singapore to outpace Las Vegas by the end of next year.
But Las Vegas Sands stock received a dose of reality earlier in the month when Macau leaders failed to approve the company's land concession for what has been known as Sites 7 and 8 on the Cotai Strip. Shares of Sands have fallen 15% since the announcement, as investors fear the Macau government is looking to restrict gaming growth.
By Glenn At 2011-10-27
Without Asia, Las Vegas Sands(LVS) would be a losing bet. The casino operator reported second-quarter earnings that significantly beat expectations, as revenue soared, but all of its properties outside of Asia missed estimates.
During the quarter, the company lost $4.7 million, or a penny a share, compared with a loss of $222.2 million, or 34 cents in the year-ago period. Excluding items, Sands said it would have earned $129.3 million, or 17 cents a share, easily topping the consensus Wall Street estimate of 9 cents a share.
Revenue surged 51% to $1.59 billion, in-line with forecasts. A majority of the growth came from Asian markets like Macau and Singapore, as Sands China saw revenue climb 41% to $1.03 billion.
Sands opened its first casino in Singapore in April. In its first 65 days of operation, the $5.7 billion Marina Bay Sands generated $94 million in earnings before interest, taxes, depreciation and amortization. In comparison, Las Vegas EBITDA dropped 15% to $66 million from $78 million in the second quarter last year.
Chairman and CEO Sheldon Adelson still expects the Singapore resort to rake in $1 billion in EBITDA next year. "We have a group of Koreans flying in every week," he said during a conference call. "I think that the outer reaches of our marketing radius is wider than what we thought."
Sands is also looking to expand further in Macau, with two sites on the Cotai Strip that haven't started development yet.
Still, the Asian market isn't without its drama. Last week, the company announced the departure of Sands China CEO Steve Jacobs'. While Sands did not provide a reason for his termination, it shouldn't come as much of a surprise. Speculation has arisen over disagreements between Las Vegas Sands Chairman Sheldon Adelson and Jacobs, and it follows the departure of executive director Stephen Weaver earlier in the year, who resigned due to personal reasons.
The company quickly appointed Edward Tracy as president and chief operating officer, and David Sisk as executive vice president and chief casino officer.
Best Casino Stocks In 2013:Wynn Resorts Limited (WYNN)
Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wynn Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.Advisors' Opinion:
By Jeanine Poggi At 2011-10-27
Wynn Resorts'(WYNN) run up of more than 55% this year has caused Wall Street to question its valuation.
Currently, eight analysts have a buy rating on Wynn, 16 say hold, two rate it underperform rating and one says to sell the stock.
"With little on the growth horizon in the intermediate term, new competition from Cotai coming in 2011 and 2012 ... and the unclear timing of a true recovery in Las Vegas, we see few catalysts not yet priced-in to pull valuation higher than current levels," Bain wrote in a note following its third-quarter earnings report.
During the quarter, Wynn lost $33.5 million, or 27 cents a share, compared with a profit of $34.2 million, or 28 cents, in the year-ago period. The loss was attributed to charges related to servicing its debt. On an adjusted basis, Wynn actually earned 39 cents, matching Wall Street's outlook.
Total Revenue grew to $1 billion from $773.1 million, better than the $990.8 million analysts predicted.
In Macau, Wynn reported a 50% surge in revenue to $671.4 million, while EBITDA was $198 million, up 54.5% from $128.2 million in the third quarter of 2009. Earlier in the year the company opened its $600 million Wynn Encore Macau, which added 414 rooms to the market.
Looking ahead, Wynn expects to break ground on its Cotai development in early 2011. The $2 billion to $3 billion project is slated to open in 2015, and management said it would provide additional details following its fourth-quarter earnings report.
In Las Vegas, CEO Steve Wynn says the Strip is on the road to recovery. "I believe we have seen the bottom in Las Vegas," he said during the company's third-quarter conference call. "I don't know how fast it is going to get better but it isn't going to get any worse."
Las Vegas revenue inched up 3.1% to $334.5 million during the three-month period, and EBITDA grew 9.3% to $76.5 million.
Wynn also issued a cash dividend of $8 a share payable on Dec. 7 to shareholders of record on Nov. 23.
By Carlson At 2011-10-27
Wynn Resorts(WYNN) saw its second-quarter profit more than double, but most of that strength came from casino wins, and investors were unimpressed.
During the quarter, the casino operator earned $52. 4 million, or 52 cents a share, on revenue of $1.03 billion, higher than forecasts of 42 cents on revenue of $992.3 million. This compares with a profit of $25.5 million, or 21 cents, on revenue of $723.3 million, in the year-ago period.
Wynn had already pre-announced disappointing results for its Las Vegas properties, citing higher costs, including employee health care and benefits, and marketing expenses. Its operating loss for its Wynn Las Vegas and Encore widened to $17.2 million from $8.3 million last year. Revenue rose 1.7% to $318 million.
Occupancy at the Wynn Las Vegas jumped to 92.6% from 86.6% a year earlier, but revenue per available room fell 3.2%.
Still, management indicated that there is a slight improvement on the Strip, with an increase in forward group bookings and some bright spots for the ability to yield rates. But management tempered enthusiasm by saying there are some struggles and uncertainty in the marketplace.
"We hope for continued improvement in Las Vegas or -- let me put it different, we hope that we'll get smarter in Las Vegas in dealing with the peculiarities of this market --and this very, very mercurial, national economic market we're living with," said Steve Wynn, chief executive, in a conference call. "The national economy and the political environment in the country as we head up to the elections [is] very, very touchy. And it is impacting all businesses."
The biggest boost, of course, came from Macau, where revenue surged 74% to $714.4 million from $410.4 million last year.
The company opened its Encore Macau in the spring, boosting its market share to about 16% from about 13%, Sterne Agee analyst David Bain wrote in a note.
Wynn is in the process of working on a new development on the Cotai strip, which should spike investors' interest as more details are revealed in the coming quarters.
Still, investors are concerned that as comparisons get harder in Macau, and second-quarter results are adjusted for hold (how much the casino won), Wynn may not be able to outperform. But Bain reassures, "this has been discussed as nauseam by investors, sell-side analysts, the press -- and even dinner-table relatives -- for some time. We believe the Street is underestimating the summer months in Macua, which may help to produce a new leg up for Macau stories, with Wynn being the most profitable on a per position basis."
Best Casino Stocks In 2013:MGM Resorts International (MGM)
MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.Advisors' Opinion:
By Hawkinvest At 2012-2-23
MGM Resorts International (MGM) is one of the world's largest hotel and casino companies, based in Las Vegas. Since December, MGM shares have been trading in a range of about $9, to almost $15 per share. The stock is now at the upper limit of the recent trading range which means that the risk of holding or buying this stock right now, could be elevated. MGM shares have rallied with the markets but appear extended and vulnerable to a sell-off. The company has a heavy debt load and it has been reporting losses. The balance sheet has about $13.45 billion in debt and only about $1.97 billion in cash. MGM could be impacted by higher oil prices because many consumers could cut back on spending if they go to Las Vegas, and some might decide not to go at all, and instead opt for a "staycation." With MGM facing challenges and the shares near recent highs, it could make sense to sell now and buy on dips later this year.
Here are some key points for MGM:
Current share price: $14.18
The 52 week range is $7.40 to $16.05
Earnings estimates for 2011: a loss of 53 cents per share
Earnings estimates for 2012: a loss of 39 cents per share
Annual dividend: none
By Jeanine Poggi At 2011-10-27
It was another rocky year for MGM Resorts, but sentiment could turn slightly more bullish heading into 2011.
For the year, shares of the Las Vegas-based casino operator grew 33%, as trends improved on the Strip in the second-half of the year.
In October, Las Vegas reported a 16.1% jump in gaming revenue to $494.8 million. MGM generates about 80% of its EBITDA on the Strip.
While gaming revenue in Nevada is still expected to decline 2.9% in 2010, according to PricewaterhouseCoopers, the market could return to pre-recession levels by 2010. The first predicts Nevada could book mid-single-digit gains between 2012 and 2014 and grow at an annual compound rate of 4.1%.
Macau will also be in focus as MGM readies itself for a potential initial public offering on the Hong Kong stock exchange. The company filed an application for the IPO on Sept. 1, and analysts expect, if approved, the deal could be completed by the end of the first quarter of 2011.
The potential legalization of online gaming could be a tailwind for MGM in 2011. If a bill is passed, MGM will be able to tap into its database of about 60 million customers and capitalize on its well recognized and trusted brand name, Bain says.
"We do not think investors are giving MGM any credit for the potential opportunity, and believe it provides only upside at this point," Greff wrote in a note.
MGM is also in the process of divesting its 50% stake in the Borgata in Atlantic City, which it co-owns with Boyd Gaming. The company said it received a $250 million offer for the casino, but declined to reveal the identity of the bidder. MGM agreed to sell its half after Atlantic City regulators expressed concern over MGM's partnership in Macau with Pansy Ho, whose family was allegedly linked to organized crime in China.
Despite these catalysts, there are still long-term issues facing MGM, most notably increasing competition in Las Vegas.
The Cosmopolitan, which opened this week, is one of CityCenter's biggest threats in the New Year. The resort-casino, which is owned by Deutsche Bank, includes about 3,000 rooms, a 10,000-square-foot casino, 1,500 slot machines and 83 table games.
The old school of thought is that the opening of Cosmopolitan could help bolster the Las Vegas Strip, generating traffic at other destination properties. But while the theory that when a new casino property opens it grows the market may have been true in the heyday of Vegas, it is no longer valid in today's economy, says Alex Calderone. "Cosmopolitan opening is not good for anyone. There's a good chance it will cannibalize [MGM's] Bellagio and CityCenter," he predicts.
There are also rumblings that CityCenter may have to take drastic measures in 2011 and that MGM could be considering some sort of restructuring for the property, according to several sources.
But upcoming potential momentum could push these concerns out of investors' minds, at least in the early months of the New Year.
By Goodwin At 2011-10-27
MGM Resorts International(MGM) has the most exposure to the Las Vegas market, making it a bet only for those with thick skin.
For the second quarter, the casino operator lost $883.5 million, or $2 a share, compared with a loss of $212.5 million, or 60 cents, in the year-ago period.
A majority of the loss was attributed to a $1.12 billion writedown on its investment in CityCenter in Las Vegas. This is the third time MGM has had to write down CityCenter, as the casino has seen little improvement in operating profit since it opened in December. The $8.5 billion development took a loss of $128 million.
Excluding this writedown, MGM actually lost 35 cents a share, still significantly more than analysts estimates of a 24-cent loss. MGM's revenue rose 3% to $1.54 billion from $1.49 billion, ahead of analysts' estimates of $1.46 billion.
Revenue-per-available room on the Las Vegas Strip decreased 2%, although Bellagio and MGM Grand showed improvement, the company said. Occupancy levels slipped to 93% from 94% while the average daily rate fell a dollar to $110. "The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery," Chief Executive Officer Jim Murren said in a statement.
Some of MGM's losses in Las Vegas were offset by its joint venture in Macau with Pansy Ho. MGM Macau earned $40 million, compared with a loss of $8 million last year
Outside of Vegas, MGM said last week that it agreed to sell land from its Borgata hotel in Atlantic City for $73 million to Vornado Realty Trust and Geyser Holdings. The Borgata land, which is co-owned with Boyd Gaming(BYD), is about 11.3 acres, which would translate into about $6.5 million per acre.
The transaction still needs to be approved by New Jersey regulators, and is expected to close by the fourth quarter. Once this transaction is complete, MGM will still own about 85 acres of developable land in Atlantic City.
Earlier in the year, MGM said it planned to divest its 50% stake in the Atlantic City casino, which is currently in trust. The casino operator is still in talks with potential buyers of Borgata casino, and hotel and investors will be waiting for an update on its progress when second-quarter earnings are released.
"We view this [deal] as a very modest positive in that there are still buyers of Atlantic City assets out there, at least at the right price," J.P. Morgan analyst Joseph Greff wrote in a note. "We don't necessarily interpret [the] news as any indication that MGM is closer to selling its 50% stake in Borgata."
Best Casino Stocks In 2013:Penn National Gaming Inc. (PENN)
Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.Advisors' Opinion:
By Jeanine Poggi At 2011-10-27
Penn National Gaming(PENN) is poised to be the winner among the regional gaming stocks in 2011, according to analysts.
So far in 2010, Penn's stock has risen about 22%, less than most other regional operators. But its expansion pipeline should buoy the stock in the New Year.
In the third quarter, the company rolled out table games at its West Virginia and Pennsylvania facilities, which led Penn to see profit more than double during the quarter. Penn also opened its Maryland slot casino at the end of the year, which should drive positive EBITDA growth past the second quarter of 2011.
Heading into 2012, Penn also has one development in Kansas and two in Ohio in the pipeline.
In November, Penn announced it is making its first foray into Las Vegas with the purchase of M Resort for $230.5 million. The high-end casino cost $1 billion to build, and Anthony Marnell III spent an additional $240 million for the land. Penn now gets a relatively brand new casino for a fraction of the total cost of the project, and less than even the price of the land itself.
"Penn's strong development pipeline remains on track and we continue to believe current share price levels do not fully account for a pipeline that we believe is worth roughly $10 per share in present equity value," wrote Wells Fargo analyst Carlo Santarelli in a note. "We believe Penn is a proven developer, [and] despite the numerous projects, has not bitten off more than it can chew. In fact, we believe Penn will likely benefit greatly from its first-mover advantage in Kansas, as well as what we think will be limited competition in the early days of its two Ohio projects."
Looking ahead, Penn now expects 2010 full-year earnings of $1.15 a share from prior guidance of 98 cents, and is calling for revenue of $2.46 billion from $2.44 billion.
And even if domestic consumer spending remains soft, Sterne Agee analyst David Bain expects Penn will outperform other regional gaming operators.
By Quickel At 2011-10-27
Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.
But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.
Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.
During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.
Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.
Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.
The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.
Best Casino Stocks In 2013:Boyd Gaming Corporation (BYD)
Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2009, the company owned and operated 15 casino entertainment facilities located in Nevada, Mississippi, Illinois, Louisiana, Indiana, and New Jersey. It owned approximately 812,500 square feet of casino space, containing approximately 21,400 slot machines, 425 table games, and 7,550 hotel rooms. The company also owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as engages in travel agency business. In addition, Boyd Gaming Corporation holds a 50% interest in a limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. The company was founded in 1988 and is headquartered in Las Vegas, Nevada.Advisors' Opinion:
By Jeanine Poggi At 2011-10-27
The Las Vegas locals and Atlantic City markets have the longest road to recovery, making Boyd Gaming (BYD) one of the most challenged stocks in the sector long-term.
It's not a surprise then that Boyd saw some of the most muted gains in 2010, with shares rising just 13.8% since the beginning of the year.
In Atlantic City, where Boyd owns a 50% stake in the Borgata, gambling revenue plunged 13% in November. The New Jersey Boardwalk has been under pressure even before the recession began, as nearby regions expand their gaming presence.
Both West Virginia and Pennsylvania added table games to casinos in the second half of the year and new properties opened in Philadelphia and Maryland. In 2011, Atlantic City will also have to contend with additional growth in Pennsylvania and the pending opening of the Aqueduct in New York City.
Given this, Boyd decided not to exercise its right to match a $250 million offer MGM Resorts(MGM) received for its 50% stake in the Borgata. MGM decided to divest its joint venture with Boyd after the Atlantic City Gaming Commission criticized its relationship with Pansy Ho in Macau, whose family has allegedly been tied to organized crime in China.
In the Las Vegas locals market, where Boyd generates about 44% of its EBITDA, trends are improving, but not as quickly as analysts would have hoped. In October, gaming revenue in the market grew 6.2% to $169.4 million.
In its third quarter, Boyd disappointed Wall Street, with adjusted earnings coming in at 2 cents a share, shy of consensus estimates of 5 cents. Revenue dropped 4% to $595.4 million.
Boyd also announced plans to sell $500 million of eight-year notes. Proceeds will be used to buy back senior subordinated notes due 2012 and to repay bank loans.
By Hesler At 2011-10-27
Boyd Gaming(BYD) posted a bigger-than-expected drop in its second-quarter earnings, citing weak performance in Las Vegas, the Midwest and the South.
During the quarter, the casino operator earned $3.4 million, or 4 cents a share, a 73% plunge from $12.8 million, or 15 cents, in the year-ago period. Adjusted earnings came in at 5 cents a share, significantly lower than the 10 cents Wall Street predicted for Boyd.
Boyd's revenue fell 6% to $578.4 million, also short of the consensus of $588 million.
"The lingering effects of the recession have left consumers unusually sensitive to shifts in the economy, and they now react more quickly to economic data and other developments, such as fluctuations in the stock market," said CEO Keith Smith, in a statement. "Although conditions remain uncertain, we believe long-term stabilizing trends are still in place, and that year-over-year growth is achievable by the end of 2010."
In the Las Vegas locals market, the rate of decline in earnings before interest, taxes, depreciation and amortization rose to 16.2% from 10.8%, J.P. Morgan analyst Joseph Greff wrote in a note. Boyd previously reported a 9.9% decline for its Borgata property in Atlantic City. Revenue came in at $186.9 million, a 2.4% decrease from the year-ago period.
"We think second-quarter results are less important than the coming operating results in the second-half of 2010, when the Atlantic City market faces increased regional competitive pressures from tables in Pennsylvania and West Virginia and the first Philadelphia casino opens this summer," J.P. Morgan analyst Joseph Greff wrote in a note.
Greff reaffirmed his underweight rating on Boyd, given increasing competition in Atlantic City, a weak recovery in the Las Vegas locals market and stagnant regional gaming trends.
While there is no doubt the Atlantic City gaming market remains one of the most depressed, Borgata continues to dominate the market and gain share. Atlantic City saw gaming revenues plunge 11.1% in June to $286.8 million. Boyd co-owns Borgata with MGM Resorts, which is currently in the process of divesting its 50% stake.
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