Last week was all about earnings releases in the gambling industry. Melco Crown Entertainment (NASDAQ:MPEL) posted dismal fourth quarter results with earnings and revenues missing the Zacks Consensus Estimate. Meanwhile, after missing the consensus estimates for two consecutive quarters, Pinnacle Entertainment (NYSE:PNK) posted better- than-expected fourth quarter results. Boyd Gaming (NYSE:BYD) broke even, which compared favorably with the consensus mark. Its revenues however fell short of estimates.
Meanwhile, Wynn Resorts (NASDAQ:WYNN) was busy working on its balance sheet restructuring. (Read last development: Gambling Stock Round Up
Recap of the Week’s Important Stories:
1. Melco Crown, which earns a better part of its revenues from Macau, posted fourth quarter adjusted earnings of 22 cents per American Depositary Share (ADS) that missed the Zacks Consensus Estimate of 26 cents by 15.4%. Further, earnings declined 49% year over year. The downside reflects lower revenues.
In the quarter, net revenue declined 20% year over year to $1.12 billion and also missed the consensus mark of $1.14 billion by 1.5%. The sluggish revenues reflect lower group-wide rolling chip revenues and mass market table games revenues.
The downside reflects a slowdown in Macau gambling growth as a result of high-stake gamblers curtailing spending amid a cooling Chinese economy. The region has struggled owing to the anti-graft corruption drive, which has lowered footfall at the casinos. (Read more: Melco Crown Lags Q4 Earnings, Rolling Chip Revenues Fall)
2. As in the third quarter of 2014, Boyd Gaming posted breakeven results in the fourth quarter of 2014. Results compared favorably with the Zacks Consensus Estimate of a loss of 6 cents and a loss of 24 cents per share incurred in the year-ago quarter. The upside reflects improved year over year revenues, and lower operating and interest expenses. Share price went up in response to the better-than-expected results.
Net revenue of $531.6 million missed the consensus mark by 1.7%. However, it was up 1.4% year over year due to an improvement in revenues at all its segments except Downtown Las Vegas, which experienced a slight decline. Total adjusted EBITDA was $136.4 million, up 10.6% year over year.
Boyd Gaming expects total adjusted EBITDA in the range of $535.0 million to $560.0 million in 2015. This includes 50% of Borgata's adjusted EBITDA. Since Boyd Gaming’s Atlantic City partner MGM Resorts (NYSE:MGM) has re-acquired its 50% stake in Borgata in Sep 2014, Boyd Gaming will account for only 50% investment in Borgata by applying the equity method for periods subsequent to the date of deconsolidation.
3. Pinnacle Entertainment posted better-than-expected fourth quarter results with adjusted earnings of 40 cents per share that beat the Zacks Consensus Estimate of 29 cents by 38%. Also, earnings increased 29% year over year on higher revenues.
Net revenue of $554.0 million marginally beat the consensus and went up 3.6% year over year, owing to higher gaming, food and beverage and lodging revenues. Revenues at its Midwest and Southwest segment increased on a year-over-year basis while revenues at the South segment experienced a decline. Adjusted EBITDA margin was 27%, up 70 basis points year over year.
4. Wynn Resorts announced the pricing of a private offering of $1.8 billion with an aggregate principal amount of Wynn Las Vegas 5.5% Senior Notes due 2025. The notes will issued at par. The net proceeds from the offering will be used to purchase any and all of the issuers’ outstanding $1,226.6 million aggregate principal amount of 7.75% First Mortgage Notes due 2020 and any and all of the issuers’ outstanding $377.01 million aggregate principal amount of 7.875% First Mortgage Notes due 2020.
Additionally, the company intends to satisfy and discharge the indentures governing each of the 7.75% Notes and 7.875% Notes and use any remaining net proceeds from the offering to redeem any 7.75% Notes and 7.875% Notes that are not tendered and for general corporate purposes.
Share Price Performance
Share prices of most of the companies increased over the last five trading sessions with the highest increase of 10% recorded by Wynn Resorts. However, Caesars Entertainment (NASDAQ:CZR) and Caesars Acquisition (NASDAQ:CACQ) both lost value.
Over the last six months, share prices of most gambling stocks dropped, with Caesars Acquisition witnessing the biggest decline of 31.8%, followed by a decline of 19% each recorded by Wynn Resorts and Caesars Entertainment. However, Boyd Gaming gained 41.9% over the same time frame.
What’s Next in the Gambling World?
We note that gambling stocks have oscillated between gains and losses in recent sessions and investors can expect this volatile movement to continue in the coming days as well.