More From Shawn Bolton
Must-know: A breakdown of Las Vegas Sands’ revenue
Las Vegas Sands (LVS) earns revenue through casinos, hotels, food and beverages, and convention or retail operations. The company’s main revenue driver is casino revenue. It’s generated from slot machines and table games. Casino revenue represents ~79% of the total revenues.
Must-know: Important performance metrics for casino resorts
The occupancy rate is very important for casino resorts. The occupancy rate shows the relationship between the number of occupied rooms and the total number of rooms.
Must-know: The most popular casino games
Casinos’ popularity is growing. This suggests that people like to gamble occasionally. Unfortunately, they don’t always win. For most of the people, the real fun is playing the game—not necessarily winning.
Why Caesars Entertainment has a massive $24 billion debt
Texas Pacific Group and Apollo Management took Harrah’s Entertainment, now Caesars Entertainment, private in a leveraged buyout deal valued at $30.7 billion in 2008.
Why Pinnacle’s leverage ratio could be a concern for investors
Pinnacle Entertainment (PNK) has a massive debt-to-equity ratio of 15.4. This indicates that PNK is very aggressive in financing its operations with debt.
Must-know: MGM’s relative share price performance
Share prices for most of the gambling stocks declined significantly over the last three months. MGM Resorts (MGM) declined 14.9%.
Must-know: Money laundering and terrorist financing in casinos
The money laundering process takes place in three phases—Placement, Layering, and Integration. Casino regulators make sure that gaming is conducted honestly. They approve the game rules.
Why China’s anti-corruption campaign hurts Macau
Xi Jinping—the Chinese President and General Secretary of the Communist Party—recently launched an unprecedented anti-corruption campaign. This campaign investigated and prosecuted hundreds of officials across the nation.
Why the US online gambling industry could be $5.2 billion by 2020
Morgan Stanley expects that exponential growth in the U.S. online gaming market could happen through interstate online poker and wide-area progressive slots.
Key Indicators And Recent Trends In The Casino Industry
Casino gambling is spread across major destinations around the world. Casinos, at major destinations, are being influenced by certain factors. This is hampering industry growth.
Must-know: Key performance metric tracked by Las Vegas Sands
Adjusted property EBITDA shouldn’t be regarded as an alternative to looking at income from operations, which indicates operating performance. Nor is it an alternative to looking at cash flow from operations, which measures liquidity.
Why investors should watch casino industry indicators and trends
Casino gaming is a business that’s spread across the world. Major casino destinations include Las Vegas, Macau, and Singapore. There are regional venues across all the continents.
Must-know Wall Street ratings on Las Vegas Sands
Two analysts rated the stock as neutral or hold, and six assigned a buy or overweight rating to the stock. The company’s consensus rating is buy. And its consensus mean price target is ~$71.
Why investors should learn about MGM’s top shareholders
As an investor, you should know whether or not MGM’s (MGM) management is committed to its future. Management shows its commitment by owning shares.
Why MGM’s liquidity could be a concern for investors
Liquidity ratios determine a company’s ability to meet its short-term obligations. A company’s liquidity position can be measured by using the current ratio or the quick ratio.
Why Baccarat gambling provides revenue for the Las Vegas Strip
The casinos in the Las Vegas Strip clearly benefit from high-end Baccarat play. Over the last four years, Baccarat revenue ranged from 43.5% of table games revenue in 2011 to 48.2% in 2013.
Why Marriott is Buying Back Its Own Shares
Marriott repurchased 7.7 million shares of common stock valued at $544 million in 4Q14 and 24 million shares for $1.5 billion in 2014.
Why MGM’s share price isn’t as volatile as its peers
MGM derives 34% of its revenues, respectively, from Macau. Since MGM has comparatively less exposure to Macau, its share price hasn’t been volatile.
Why Las Vegas Sands is committed to creating shareholder value
Las Vegas Sands paid a recurring quarterly dividend of $401.2 million, or $0.50 per common share during Q3 2014, up 42.9% year-over-year.
MGM’s earnings plunged, but domestic operations set a record
MGM derives one-third of its revenue from China. It witnessed a significant decline in revenue and earnings due to a lack of VIP participation.
Las Vegas Sands’ solid performance in hotel segment
RevPAR is the most important of all the performance metrics used in the hotel industry. It captures both room rates and occupancy levels, giving information about how well a company fills its rooms, and how much it’s able to charge.
Macau’s inflation rate falls again
When inflation decreases, consumers have greater purchasing power and a higher spending capacity. This is a positive sign for casino resort companies.
Why investors should look at MGM’s operating segments
Currently, MGM operates 15 wholly-owned resorts in the U.S. MGM China’s operations include MGM Macau and the development of MGM Cotai.
Why MGM Resorts generates its revenues from two segments
MGM Resorts (MGM) is a global hospitality and entertainment company. MGM develops, builds, and operates destination resorts. MGM was founded in 1986.
Why capital expenditures are important for MGM Resorts
Capital expenditure is obtained to buy fixed assets or add to the value of an existing fixed asset. MGM’s senior credit facility limits the its capital expenditures to $500 million per fiscal year.
Scientific Games Merger Expected To Yield Cost Synergies
Scientific Games expects to achieve ~$220 million in cost synergies and $25 million in capital expenditure savings by consolidating operations.
Why Chinese gamblers influence Macau casinos
Growth in visitors from mainland China remained at 13% in August 2014 on a year-over-year (or YoY) basis. Macau’s monthly visitors surged over three million in August 2014.
Profitability analysis of Pinnacle Entertainment
Pinnacle Entertainment’s compounded annual growth rate of adjusted property EBITDA over a three-year period ending on December 31, 2013, stood at 20.2%.
Must-know: Caesars Entertainment’s recent 2Q14 results outlook
Caesars Entertainment reported a Q2 loss of $466.4 million, or $3.24 a share, as compared to last year’s Q2 loss of $212.2 million, or $1.69 a share.
Must-know: An overview of MGM Resorts
MGM Resorts (MGM) was founded in 1986. MGM is based in Nevada. It’s one of the leading global hospitality and entertainment companies.
Overview of Caesars Entertainment and its complicated past
Caesars Entertainment has 51 casinos in 13 U.S. states and five countries. 38 are in the U.S. and primarily consist of land-based and riverboat casinos.
Las Vegas Sands’ major sources of revenue
Tables contribute only 6% to the total number of slot machines and tables combined in the U.S. Clearly, table games are more popular in Asia than in the U.S.
What is Pinnacle Entertainment’s forward valuation?
As of November 28, 2014, Pinnacle Entertainment’s one year forward EV/EBITDA stood at 9.2x compared to its peer group average of 7.6x.
Why Caesars Entertainment’s stockholders’ equity is negative
Caesars Entertainment’s (CZR) stockholders equity is negative, according to its latest balance sheet. Stockholder equity consists of capital contributed and retained earnings.
Melco Crown is positioned to exploit mass market growth in Macau
Melco Crown Entertainment’s mass market table games segment is still the major driver in Macau. In 2014, Macau’s visitation increased by 7.5% YoY.
Institutional investors dominate at Pinnacle Entertainment
Pinnacle Entertainment (PNK) has approximately 59.2 million outstanding shares, with free float of 57 million shares. Institutional investors hold around 122% of the float.
Must-know: Las Vegas Sands’ future prospects
Japan is thinking about opening its market to casinos in the near future. Legalizing casinos in Japan is a long-term catalyst for the casino industry. Las Vegas Sands (LVS) has a huge potential for growth in Japan. The growth in Japan could be as big as the growth in Macao.
Macau Casinos May Struggle In Early 2015
Macau’s gaming slowdown may continue into 2015. It’s due to a lack of new resorts. Macau’s casino gambling revenue is expected to keep declining until mid-2015.
Casinos May Look To Expand Non-Gaming In 2015
Casino operators may want to add more non-gaming amenities in 2015. This will strengthen customer spending after a year of slow casino revenues.
Casino REITs Are Becoming Popular In The US
US casino operators are considering REIT spin-offs to achieve higher valuations. Real estate is a main income source. REITs distribute at least 90% of their taxable earnings to shareholders.
Online Gambing Generated Over $100 Million In New Jersey
New Jersey allows gambling on casino games and poker. Currently, it dominates the market. It has ~90% of total US online gaming revenue.
Caesars Entertainment’s New Corporate Structure and Governance
On December 22, 2014, CZR and Caesars Acquisition Company (CACQ) entered into a definitive agreement to merge in an all-stock transaction.
A Quick Guide To The Bifurcation Of Caesars’s Operating Leases
The initial term of each lease will be for 15 years with four five-year renewals. CZR will guarantee payments and performance of the OpCo’s obligations.
Scientific Games: Strategic Acquisition of Bally Technologies
In its merger agreement with Bally Technologies, Scientific Games agreed to acquire all outstanding Bally common stock for $83.3 cash per share.
Consolidated Scientific Games: A Stronger Management Team
The executive management team of SGMS includes President and CEO Gavin Isaacs and Executive Vice President and CFO Scott Schweinfurth.
Revenue breakdown for Pinnacle Entertainment
Pinnacle Entertainment’s gaming revenues represented 89% of total revenues generated by the company for the trailing twelve months ending September 30, 2014.
Pinnacle Entertainment’s use of capital
Capital employment Casino companies fund their acquisitions with a significant amount of debt capital. ROIC (return on invested capital) is an important metric that shows how effectively a company makes use of its capital. To calculate ROIC, divide EBIT (earnings before interest and tax) by the employed capital. A higher ratio denotes that more profit […]
Las Vegas Sands’ adjusted property earnings double in Singapore
Las Vegas Sands’ adjusted property EBITDA at Marina Bay Sands in Singapore doubled, reaching a property record of $518.5 million, up ~100% year-over-year.
Wynn Resorts: A leading operator of destination casino resorts
Wynn Resorts (WYNN) operates Wynn Macau and Wynn Las Vegas, with casino hotel resorts in Macau, China, and Las Vegas, Nevada.
VIPs are cautious as Wynn Resorts’ table games win suffers
WYNN’s VIP table games drop in 4Q14 was $20.7 billion, 39.9% lower than 4Q13. Drop is cash and net markers issued and deposited in a gaming table drop box.
Wynn Resorts’ EBITDA takes its biggest nosedive since 2009
WYNN’s adjusted property EBITDA fell a whopping 29.3% year-over-year to $352 million, the biggest year-over-year fall since the second quarter of 2009.
Hotel occupancy is way up at Wynn Macau and Wynn Las Vegas
WYNN’s hotel occupancy increased at Macau and Las Vegas in 4Q14. Macau had 98.6% and Las Vegas had 82.1% compared to 96.7% and 80.8%, respectively, in 4Q13.
Melco Crown Entertainment’s operations are focused on Asia
Established in 2004, Melco Crown Entertainment (MPEL) owns, develops, and operates casino gaming and entertainment resort facilities. It’s focused on Asia.
Melco Crown Entertainment’s 4Q14 revenue decreased
For the full year ending December 31, 2014, Melco Crown Entertainment reported net revenue of $4.8 billion—down 5.9% YoY.
Why Melco Crown’s rolling chip volume decreased in 4Q14
Rolling chip volume refers to the amount of non-negotiable chips wagered and lost by the rolling chip market segment. It’s largely represented by VIP players.
Wynn’s share price drops immediately post 4Q14 results
Wynn Resorts’ (WYNN) share price plummeted 6.1% immediately after its 4Q14 results. However, the share price should gain momentum once new resorts are open.
Why The Casino Business Is Affected By Inflation
When inflation is low, consumers have greater purchasing power. They have a higher spending capacity. Greater purchasing power is a positive sign for casino resort companies.
Wynn Resorts: A revenue breakdown
Wynn Resorts (WYNN) earns its revenues through casinos, hotels, food and beverages, and entertainment and retail operations.
Recent developments for Wynn Resorts
Wynn Resorts (WYNN) is currently constructing Wynn Palace, a fully integrated resort in the Cotai area of Macau.
Wynn Resorts’ liquidity position improves
Wynn Resorts’ strength in meeting its short-term obligations has improved. The increase was mainly attributable to a decrease in accounts payable and gaming taxes payable and an increase in cash and cash equivalents during the nine months ended September 30, 2014.
Wynn Resorts’ management team brings a lot of experience
Wynn Resorts’ strong management Strong management is the backbone of a successful organization. Wynn Resorts’ (WYNN) senior executive team has an average of more than 25 years of experience in the hotel and gaming industries. Wynn Resorts is part of an exchange-traded fund (or ETF) like the Consumer Discretionary Select Sector Standard and Poors depositary […]
Caesars plans to restructure its largest operating unit as a REIT
REITs generate income by collecting rent and pay out at least 90% of taxable income in the form of dividends to shareholders. By converting CEOC into a REIT, the beneficial holders of CEOC’s senior secured credit facilities would receive a 100% recovery in cash and debt.
An overview: Wynn Resorts and its business segments
Wynn Resorts (WYNN) is a leading developer, owner, and operator of destination casino resorts.
Wynn Resorts’ VIP gaming fails to deliver
Wynn Resorts’ (WYNN) VIP table gaming’s drop in 3Q14 was 17.4% lower than the same quarter in 2013. The Macau VIP gaming revenues have been negatively impacted by the ongoing anti-corruption campaign in China.
Mass market segment outperforms at Wynn Resort’s Macau operation
Mass market table wins increased due to a shift of gaming tables from the VIP to the mass market.
An overview of Penn National Gaming’s diverse holdings
PENN’s operated facilities feature ~31,000 gaming machines, 760 table games, and 3,100 hotel rooms. PENN owns and operates gaming and racing facilities with a focus on slot machines.
Must-know: Penn National Gaming’s performance metrics
Performance metric Penn National Gaming, Inc. (PENN) defines adjusted EBITDA as earnings before interest, taxes, stock compensation, debt-extinguishment charges, impairment charges, insurance recoveries and deductible charges, depreciation and amortization, gain or loss on disposal of assets, and other income or expenses. Adjusted EBITDAR is adjusted EBITDA excluding rent expenses such as those associated with PENN’s […]
Acquisitions Help Casinos Grow Inorganically
Scientific Games agreed to buy WMS Industries for $1.5 billion, emerging as a global supplier of lottery equipment and slot machines to casinos.
Melco Crown Burdened With Heavy Gaming Taxes
MPEL’s room expenses comprise ~1% of its direct costs, mainly representing the costs in operating its hotel facilities at Altira Macau and City of Dreams.
Why Melco Crown Is Profitable In The Casino Space
MPEL derives ~94% of revenues from casino operations. Its casino business gross margin is 50% for the trailing 12-month period ending September 30, 2014.
Cost of Equity Deteriorating Melco’s WACC
Melco Crown Entertainment’s ROIC has been lower than its weighted average cost of capital for most of the last three years.
A Business Overview Of Melco Crown Entertainment
Melco Crown Entertainment has two casino-based operations—City of Dreams and Altira Macau—and noncasino-based operations at its Mocha Clubs.
Must-Know: Melco Crown’s Major Shareholders
Members of management owning shares of their company shows confidence in the firm’s direction and outlook.
Melco Share Price Drops, But Outperforms In The Long Run
Price performance Let’s explore the five-year share price performance of Melco Crown Entertainment (MPEL) relative to its peers, as well as the broader market that includes SPDR S&P 500 ETF (SPY). Share prices of gambling stocks collapsed heavily over the last three to six months. This drop largely resulted from the Chinese government’s crackdown on corrupt officials, which negatively […]
Wall Street Analysts’ Outlook Positive For Melco Crown
Morgan Stanley upgraded MPEL shares to an overweight rating in a research note issued to investors on January 5, 2015, with a revised target price of $28.
Six Flags Entertainment: An overview of the largest theme park
Six Flags Entertainment Corp. (SIX) is the world’s largest regional theme park company with $1.1 billion in revenue and 18 parks across North America.
Why Six Flags’ operating cash flows are prone to fluctuation
Six Flags Entertainment’s (SIX) operating cash flows are largely driven by attendance and per capita spending levels.
Must-know: How Six Flags generates its revenues
Six Flags derived 55% of its revenues from theme park admissions for the last 12 months ended September 30, 2014.
Must-know: A look into Six Flags’ debt-to-equity ratio
Industry debt-to-equity ratio is about 5.5. Six Flags’ debt-to-equity ratio of 4.0 shows the company aggressively finances operations with debt capital.
Share price performance for Six Flags since bankruptcy recovery
Six Flags’ share price on May 10, 2010, reflects $7.36 per share, the price of new common stock upon the company’s emergence from bankruptcy.
A brief overview of Six Flags’ management
Six Flags’ management plays a vital role in shaping the company and leading it in the desired direction. This article reviews three management positions.
Why Casinos Rely On Disposable Income
On a year-over-year basis, real disposable income increased 2.9%. More disposable income boosts consumer buying power.
Why China’s Disposable Income Could Drive Leisure Demand
China’s disposable income per capita remained almost flat at 6,800 Chinese yen on a YoY basis for the three months ending in December 2014.
An important overview of Las Vegas Sands, a casino company giant
An overview of Las Vegas Sands (LVS) shows that the company currently owns 70.1% of Sands China Ltd., which operates LVS’s four Macao properties.
Why the US casino market performed well
Today, a number of US-based casino companies have operations in foreign markets—like Macau. Also, they’re developing new properties in Macau.
Analyzing Starwood’s Asset-Light Strategy
In 2006, Starwood’s management embarked on an asset-light strategy. It decided to sell a significant portion of Starwood’s owned hotel portfolio.
Starwood’s Vacation Ownership Business Spin-Off
On February 10, 2015, Starwood Hotels and Resorts announced plans to spin off its vacation ownership business into a separate publicly traded company.
What Are Starwood’s Revenue Sources?
The revenue from owned, leased, and consolidated joint ventures is primarily derived from hotel operations. This includes room rentals and food and beverage sales.
Why Marriott’s Revenue Increased in 2014
Marriott’s revenues totaled nearly $3.6 billion in the fourth quarter of 2014, compared to $3.2 billion in the fourth quarter of 2013.
Why Macau’s gambling revenue per visitor increased
Macau’s average gaming revenue per visitor is ~$1,200–$1800, roughly 8–10 times higher than the Las Vegas Strip’s average gaming revenue per visitor.
MGM’s share price has huge upside potential
MGM’s share price hasn’t been impacted much by the anti-corruption campaign in China. The campaign took a toll in 3Q14. Its business has ~33% exposure in Macau.
Hilton’s revenue was driven by occupancy and room pricing
Hilton Worldwide (HLT) generates revenue from its hotel operations. Hilton’s system-wide occupancy increased 2.3% YoY to 71% in 4Q14.
Why did Hilton’s revenue increase in 2014?
Hilton’s 4Q14 revenue increased 7% YoY to $2,828 million. For 2014, its revenue increased by 10.5 billion, or 7.9%—compared to 2013.
US unemployment rate hits six-year low, another plus for leisure
The US unemployment rate increased slightly in January to 5.7% compared to 5.6% in December. The number of new jobs in January was expected to be 234,000.
US consumer sentiment hits 11-year high, good for casinos
The US consumer sentiment index was 98.1 in January, up from 93.6 in December. This is an 11-year high, the highest on a final basis since January 2004.
Disposable income increases, drives demand for leisure
Real disposable income increased 3.7% year-over-year. This boosts consumer buying power and means consumer spending in leisure activities may increase.
Why Macau’s gambling revenue halved in February 2015
Macau’s restriction on using China UnionPay debit cards at casinos to curb illegal money flow could be a factor in February’s drop in gambling revenues.
Las Vegas sees pricing improvements, visitor arrivals remain flat
Revenue per available room (or RevPar) was $122.03 in January 2015, up 10.2% year-on-year. RevPAR increased on account of pricing improvements at the Strip.
Why Cedar Fair’s revenue increased
Cedar Fair’s revenue increased by 15.6% year-over-year to $160.8 million in the fourth quarter of 2014.
Why Six Flags’ guest spending per capita improved
Six Flags’ per capita guest spending increased $2.79, or 7%, to $42.97 in 2014, primarily due to improved admissions pricing and new offerings in the parks.