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The Newsroom - 2008 |
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Gaming sector caught in market skid
Las Vegas Sands, Wynn Resorts only companies to see shares rise
March 01, 2008 - Volatility continued to plague gaming industry stocks in
February.
Just two of the seven casino operators tracked for an index compiled by Las
Vegas financial consulting firm Applied Analysis reported month-over-month
increases in their average daily stock prices. Two slot machine makers reported
double-digit jumps.
The rest of the companies continued a downward trend that has hit the gaming
sector since November.
"Valuations during the month of February were impacted by earnings reports for
selected operators, related forecasts by Wall Street analysts and concerns over
the performance of the national economy," Applied Analysis partner Brian Gordon
said Friday.
The gaming index, which takes into account more than 300 market variables and
economic indicators, climbed almost 78 points in February to 558.56, its first
increase since October.
Las Vegas Sands Corp. and Wynn Resorts Ltd. both reversed three-month downward
trends in February. Las Vegas Sands traded at $88.15 on an average daily basis
in February, up 4.45 percent from January. Wynn Resorts had an average daily
price of $110.79 during the month, up 4.82 percent.
Gordon credited the performance of Las Vegas Sands' massive Venetian Macau
resort in China, which reported cash flow of $117 million in the fourth quarter,
with giving the company a boost.
Deutsche Bank gaming analyst Bill Lerner said Friday that gaming revenue in
Macau may be up as high as 56 percent in February, according to media accounts
from the Chinese gaming enclave. Lerner said preliminary reports have been close
to the actual numbers when they are reported by the Macau government.
The figures are good news, he said, for Las Vegas Sands, Wynn Resorts and MGM
Mirage, which operate casinos in Macau.
"We view these results as positive, and (they) could restore confidence in the
potential growth of the Macau market," Lerner said.
MGM Mirage shares continued their decline in February, the company's fourth
straight down month. Shares in the company averaged $68.01 during the month
despite news of a $1 billion cash gain associated with its sales of half of the
massive CityCenter development to Dubai World.
MGM Mirage also tried to boost its stock by offering, along with Dubai World, to
purchase up to 15 million shares of the company's stock.
Gordon said MGM Mirage presented a mixed earnings bag to investors when it
reported fourth-quarter results last month.
"It appears higher-end properties managed to sustain healthy gaming volumes,
while lower-tier properties have been impacted by the latest economic climate,"
Gordon said.
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