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The Newsroom - 2003 |
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Gaming stocks weaker than broader market in April
May 01, 2003 - Gaming stocks underperformed broad markets in April largely
because of declining second-quarter earnings estimates and tax proposals offered
by Illinois Gov. Rod Blagojevich, analysts said Wednesday.
The Applied Analysis Gaming Index, a monthly weighted average developed by a Las
Vegas-based financial consulting company for eight local stocks, ended April at
235.7, up 2.1 percent over March and up 13.1 percent from the previous April.
In the same period, the Dow Jones casino index was essentially flat compared
with the year before although the Standard & Poor's 500 was up almost 10
percent.
"Underperforming the market was partly due to the Illinois governor's proposal
(to increase the incremental gaming tax to 70 percent from 50 percent) early in
the month," Applied Analysis spokesman Brian Gordon said.
"As the situation in Iraq was shored up, we saw some improvement and then in the
end the stocks proved volatile on news the second quarter would be soft," he
said.
At Goldman Sachs, analyst Steve Kent said gaming stocks were further depressed
over the course of the month as gaming companies, particularly MGM Mirage,
lowered their full-year estimates compared with the broader market that showed
greater stability in terms of earnings.
Fulcrum Global Partners gaming analyst Joe Greff said the MGM Mirage estimates
"took the wind out of the sales of Las Vegas-centric gaming companies. And you
had the governor of Illinois throw out some trial balloons that would decrease
the profitability of riverboat operators," including Harrah's Entertainment
Inc., Boyd Gaming Corp. and Mandalay Resort Group.
"MGM had a great first quarter, but looking to the future, they were very
cautious about May and June because of short booking windows and poor visibility
(in predicting demand) in general," he said. |
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Applied Analysis provides professional services in urban
economics, market analysis, financial advisory services,
information technology and hospitality/gaming consulting
services.
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Mandalay (closing Wednesday at $26.42) and MGM Mirage (closing Wednesday at
$28.42) stocks trailed the industry, each down almost 6 percent over the month.
Boyd Gaming Inc. (up almost 10 percent at $14.25), Harrah's and Park
Place (both up almost 8 percent at $39.39 and $7.44, respectively)
led the pack.
"For Station and Boyd, the strong price performance was due to the
planned openings of two new properties -- Thunder Valley Station
casino outside Sacramento and The Borgata in Atlantic City," Greff
said.
At Applied Analysis, Gordon said International Game Technology
(closing at $86.30, up 3.5 percent) also continued displaying a
strong performance, based on sales of ticket-in, ticket-out slot
machines and the anticipated proliferation of gaming in additional
jurisdictions.
The only storm clouds on the horizon stem from soft bookings for May
and June and fears about severe acute respiratory syndrome that are
hurting international travel, he said.
"Everyone is going to be waiting to get past those issues to see
where the second half of 2003 likely will go," Gordon said.
<< Go Back
Article Copyright ©: R. Smith, Las Vegas
Review-Journal |
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