Tags: Casinos | LVS | WYNN | MGM

Casinos Off to Hot Start in 2012

By    |   Monday, 19 March 2012 10:34 AM

Casino stocks as a group got off to a hot start in the first two months of 2012. The Applied Analysis Gaming Index recorded a 7.2 percent increase for the period, in line with the S&P 500 stock index.

In 2011, gaming stocks severely lagged the overall market in the first months of the year. An anticipated resurgence of Las Vegas business may be helping casino stocks.

The two largest gaming companies are Las Vegas Sands (LVS) and Wynn Resorts (WYNN). Both have been generating impressive growth from their Asian operations while treading water in Las Vegas. The No. 3 company in the sector is MGM Resorts International (MGM). Its main focus is on Las Vegas, but the company started generating revenue from MGM China in the second half of 2011.

For the 2011 fourth quarter, MGM reported a 7 percent revenue increase (excluding China) compared to a year earlier and 18 percent earnings jump before interest, taxes, depreciation and amortization (EBITDA) increase.

For 2011, MGM lost 56 cents per share. The 2012 consensus earnings estimate is a loss of 45 cents.

Las Vegas Sands reported revenue growth of 26 percent for the 2011 fourth quarter and an EBITDA increase of 30 percent. The near $1 billion quarterly earnings before taxes and depreciation is a gaming industry record. Las Vegas Sands reported earnings of $2.02 per share for 2011 and the Wall Street consensus estimate for 2012 is $2.56 per share. Hitting the estimate would equal 27 percent earnings growth for the year.

Results up

Wynn Resorts reported 8.6 percent revenue growth for the fourth quarter. The sales gains were balanced between 9.1 percent growth in China and 7.2 percent better results in Las Vegas. In the quarter, EBITDA results were up 30 percent for Wynn Las Vegas.

In 2011 Wynn Resorts earned $5.58 per share. Wall Street analysts forecast earnings of $5.89 for 2012.

The gaming sector added another player early in 2012 with the Caesars (CZR) initial public offering in early February. Of the analysts following the major gaming stocks, 18 of 21 rate Las Vegas Sands a strong or moderate buy, Wynn has a buy rating from 12 of 21 analysts and MGM Resorts is rated buy by 15 of 21 analysts.

Las Vegas Sands, Wynn Resorts and MGM Resorts report next on May 3, April 19 and May 3, respectively.

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Monday, 19 March 2012 10:34 AM
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