Despite all worries about the crackdown on illegal money transfer and economic slowdown, the mecca of casino gaming – Macau – is returning to life. Macau's April casino gross gaming revenue grew 16.3% and came ahead of analysts' expectations for 15% growth (read: Should Investors in the Gaming ETF Worry About Macau?).
With this, Macau reported gross gaming revenue growth for nine months in a row. Most importantly, VIP gambling segment is showing signs of recovery. Against this backdrop, casino stocks reported earnings results in the last few days. Results were moderate-to-upbeat.
Here we highlight earnings of the three big casino and hotel companies, MGM Resorts International (NYSE:MGM) , Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) .
Results in Detail
On April 27, MGM Resorts posted first-quarter 2017 adjusted earnings of $0.38 per share which surpassed the Zacks Consensus Estimate of $0.26 by 46.2%. Total revenue of $2.71 billion beat the Zacks Consensus Estimate of $2.61 billion by nearly 4% and jumped 22.6% year over year.
On April 26, Las Vegas Sands Corp. reported mixed first-quarter 2017 results wherein earnings beat the Zacks Consensus Estimate, while revenues missed the same. Adjusted earnings per share of $0.66 surpassed the Zacks Consensus Estimate of $0.62 by 6.45% and increased 40.4% year over year owing to higher revenues. Quarterly net revenues of $3.11 billion came slightly below the Zacks Consensus Estimate of $3.12 billion but increased 14.3% year over year.
On April 25 after hours, Wynn Resorts Ltd. reported better-than-expected first-quarter 2017 results. Adjusted earnings of $1.24 per share surpassed the Zacks Consensus Estimate of $0.74 by 67.6%. Further, earnings increased 15.9% from the year-ago figure of $1.07. Wynn Resorts’ revenues of $1.48 billion topped the Zacks Consensus Estimate of $1.34 billion by 10.4%. Moreover, revenues increased 47.9%.
Market Impact
While MGM and WYNN Resorts amazed investors this quarter, Las Vegas Sands delivered moderate performance post earnings. The mixed impact on the industry can be verified by the five-day return of VanEck Vectors Gaming ETF BJK which has sizable exposure to the afore-mentioned stocks.
In the last five days (as of May 2, 2017), the fund added over 0.9%. A buoyancy is also noticed in the industry and often a rising tide lifts all boats in an industry. The Zacks Industry Rank of these casino companies is in top 15% at the time of writing.
While investing in a single stock is always an option, investors can take advantage of the recovery in Macau and reassuring earnings via BJK or the basket approach.
BJK in Focus
The fund looks to track the MVIS Global Gaming Index and provides investors a direct exposure to the casino gaming market. The fund has so far attracted $21.8 million in assets and invested that in 40 holdings. The product is expensive as it charges 67 bps in fees per year.
All three abovementioned companies have created places in the top-10 holdings of the fund with a considerable share. Both companies – Sands China and Las Vegas Sands – have about 15% exposure in BJK.MGM Resorts International and MGM China holdings call for about 8% of the fund. Wynn Resorts Ltd and Wynn Macau also account for about 6% of BJK (see all Consumer Discretionary ETFs here).
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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
VANECK-GAMING (BJK): ETF Research Reports
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Zacks Investment Research