Gambling stocks get boost in January

1 February 2012

LAS VEGAS, Nevada -- The gaming sector mirrored the rest of Wall Street last month, which several analysts termed as the best January in more than a decade.

All 10 publicly traded casino operators and slot machine manufacturers charted by Las Vegas-based financial adviser Applied Analysis posted gains in average daily stock price during the month, which ended Tuesday.

The performances pushed the company's Gaming Index, which considers some 300 market variables, up almost 12 points to close at 438.77.

Two companies, MGM Resorts International and Boyd Gaming Corp., showed double-digit increases in average daily stock price, beating other companies, such as Wynn Resorts Ltd., and Las Vegas Sands Corp., which have large holdings in Asia.

Applied Analysis principal Brian Gordon said the investor speculation suggested value was being assigned to the companies whose holdings are more Las Vegas-centric than the rest of the publicly traded sector.

MGM Resorts operates 10 Strip casinos, including Bellagio, MGM Grand Las Vegas and CityCenter Aria Resort & Casino . Boyd Gaming focuses on the locals market with its Coast Casinos brand and Sam's Town Hotel & Gambling Hall property. The company also operates regional casinos in the south and Midwest and half-owns the Borgata Hotel Casino and Spa in Atlantic City.

"While the operating environment remains somewhat fragile, increased stability in the market provides a strong foundation from which operators will be measured going forward," Gordon said.

Susquehanna Financial Group gaming analyst Rachael Rothman said she wasn't surprised that investors have cooled somewhat on Asia-centric gaming companies, though Macau did grow gaming revenues more than 42 percent in 2011 to $33.5 billion.

"We have seen shares of gaming names with higher China exposure underperform, as expectations for growth in Macau have reset lower," Rothman said. "We expect gaming revenue growth will slow in 2012 and beyond to more sustainable levels."

Both the Dow Jones industrial average and the Standard & Poor's 500 recorded their best percentage jump for the month of January since 1997.

Applied Analysis attributed much on the gaming sector's January stock performance to greater profitability expectations coming from the upcoming quarterly earnings reports, broader equities market performance and a modest bump associated with stronger-than-expected gross domestic product results in China.

Las Vegas Sands, Ameristar Casinos and slot machine maker Bally Technologies report quarterly earnings today while Penn National Gaming and Wynn Resorts Ltd. have scheduled earnings reports for Thursday.

Slot machine makers experienced the same average daily stock price increases as the casino operators, although International Game Technology saw its figure grow just 1.3 percent.

Investors remain somewhat unsure about IGT's $500 million acquisition of an online social gaming company, said one Wall Street analyst.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said IGT, however, is much better positioned than its competitors to ride out any further declines in slot machine sales by American casino operators.

Wieczynski recently hosted a series of investor meetings with IGT management. In a research note, he recounted that IGT "doesn't paint a rosy picture for the domestic replacement cycle or have unrealistic views there will be a massive uptick in operator slot spending in the near-term."

Still, Wieczynski said the company, which has corporate headquarters in Las Vegas and a manufacturing base in Reno, has taken necessary steps to right-size the business.

"In the end, given IGT's dominant North American market share, improving international presence and attractive complimentary interactive opportunities, we believe the company remains well positioned to outperform its manufacturer counterparts, particularly if North American replacement demand sluggishness persists," Wieczynski said.

The meetings came shortly after IGT said it was acquiring Double Down Interactive, which is the developer of Facebook's Double Down Casino.

"(The) announcement … is being viewed skeptically from the majority of the investment community," Wieczynski said. "We continue to believe investor sentiment on the name is lukewarm at best with few expecting upside surprises throughout 2012."

Several factors, however, including game content, lead Wieczynski to believe IGT "should be able to command a greater share of operators' capital budgets in the quarters ahead."

Related Links
MGM Grand Hotel & Casino Las Vegas Details
Boyd Gaming Gaming Vendor Information
Bellagio Details
Sam's Town Hotel & Casino Details
Borgata Hotel Casino and Spa Details
Aria Resort & Casino Details


Copyright GamingWire. All rights reserved.
Featured Vendors
Imagine This
Casino City Press
Imagine This
Imagine This #1 Source for Player Gifts. Over $50 million in stock ready to ship! Let us serve you!
Casino City Press
A leading publisher and distributor of casino and gaming business data and market research reports.
Regulatory Management Counselors, PC
Casino Network
Regulatory Management Counselors, PC
Over 45 years of experience serving the legal and regulatory needs of casino industry clients
Casino Network
20+ years experience selling refurbished slot machines, parts & glass for all major brands
Slot Machines Unlimited
Oklahoma Indian Gaming Association (OIGA) Conference
Slot Machines Unlimited
Exporter of IGT, Williams, AVP, Trimline, Aristocrat, Konami, Bally, & parts over 20 yrs experience
Oklahoma Indian Gaming Association (OIGA) Conference
The biggest little show in Indian gaming! Save the date: July 14-16, 2025 Oklahoma City
Concept 3, LLC
Casino Schedule Ease
Concept 3, LLC
Custom Creations, Unmatched Value – Elevating Brands with Quality & Savings Since 2004
Casino Schedule Ease
Full Featured & customizable for the complex scheduling needs of table games & other casino depts
Rymax Marketing Services, Inc.
Players Pal
Rymax Marketing Services, Inc.
Leader in creating award winning player & employee loyalty programs & events proven to increase ROI
Players Pal
Revolutionize the way you connect with your casino players with the Players Pal mobile app
REDW Business & Financial Resources, LLC
Prezzee
REDW Business & Financial Resources, LLC
Improve Your Odds of Success: Trust in REDW’s Tribal Casino Operations & Audit Experts!
Prezzee
Prezzee provides digital gift cards from top brands to reward loyal guests and employees.
Betson Imperial Parts & Service
TribalHub
Betson Imperial Parts & Service
Your one stop shop for all your gaming and OEM needs!
TribalHub
26th Annual TribalNet Conference Sept 15-18, 2025 at Grand Sierra Resort and Casino in Reno, Nevada
Texas Slots & Gaming
Sunkist Graphics, Inc.
Texas Slots & Gaming
Wholesale gaming reimagined. Texas Slots & Gaming is your sustainable gaming partner.
Sunkist Graphics, Inc.
Specializing in the creation of best-of-breed gaming graphics - slot glass, sign faces, and more


Your Guide to 14,963 Gaming Industry Suppliers