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Why Pinnacle Entertainment’s 3Q14 revenues increased

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Net revenues

Pinnacle Entertainment, Inc.’s (PNK) revenues consist mostly of gaming revenues, which is primarily from slot machines and, to a smaller extent, table games. Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts paid to winning patrons.

Part-2

Pinnacle Entertainment’s net revenues increased 35.7% year-over-year to $568.3 million in the third quarter of 2014. Net revenues were driven positively by improved performance in its Midwest segment, South segment, and West segment. Pinnacle Entertainment’s peer companies such as Penn National Gaming (PENN) has reported a decrease in net revenues by 9.6%, while Boyd Gaming’s (BYD) net revenue change was almost flat in the third quarter of 2014 on a year-over-year basis. Exchange-traded funds (or ETFs) like VanEck Vectors Gaming (BJK) invests in these casino companies.

Midwest segment

In the company’s Midwest segment, revenues increased by 56.9% year-over-year to $305 million in the third quarter of 2014. The Midwest segment results were impacted positively by an improvement in revenue trends and profitability at Pinnacle Entertainment’s casinos such as Ameristar Casino Hotel Council Bluffs and Ameristar St. Charles, as well as stable revenue trends and improved profitability at Ameristar Casino Kansas City.

South segment

In the company’s South segment, revenues increased by 5.4% year-over-year to $202.6 million in the third quarter of 2014. However, on a same-store basis, revenues decreased by 1.3% year-over-year. Both Ameristar Casino Hotel Vicksburg and Boomtown Hotel Casino Bossier City experienced declines in revenues.

West segment

In Pinnacle Entertainment’s West segment, revenues increased by 92.9% year-over-year to $58.5 million in the third quarter of 2014. However, on a same-store basis, revenues increased by only 0.9% year-over-year.

Pinnacle’s management comment

Anthony Sanfilippo, CEO of PInnacle Entertainment, commented, “Revenues in our markets stabilized during the 2014 third quarter, and we are optimistic this will continue given the encouraging trends we experienced in October. Our portfolio generated its best year over year revenue comparisons in the 2014 third quarter. We are on track to complete 2014 as a seamless and fully integrated organization, and there is early evidence that the revenue synergy initiatives we have implemented are beginning to materializing at our Ameristar-branded properties.”

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