Top Casino Gaming Companies
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Combined, the top 3 companies accounted for 42% of the total social casino game market, while the top 15 accounted for roughly 83%. Top Social Casino Publishers in 2016 Rank. The casino industry in the United States is one of the biggest in the world, with estimated revenues of around $60 billion every year. It is hardly surprising then that some of the biggest gambling firms in the world are located in the US. Of the 12 biggest casino gaming companies in existence, more than six are based in the US.
*Top 10 Casino Gaming Companies
*Best Casino Gaming Companies
*Top Casino Gaming Companies Reviews
*Top Casino Gaming Companies Stocks
*Top 10 Casino Gaming Companies In The World
For the purposes of organizing our detailed reviews of various slots games, we’ve organized this section of our site according to which companies design and manufacture which games. Slot machineproviders like IGT have been around for decades and serve both the land-based and online casino markets. Others, like Realtime Gaming, have been around for less than a decade and only serve theInternet market.
Clicking on the links to the providers’ pages will take you to the information page on that company. That page will include a list of the games that company provides. On this page, we providebrief overviews of each company, including a couple of examples of well-known games that each company produces.
We’ve done our best to make this section as comprehensive as possible, but there are literally thousands of slots games available. If we’ve left out a provider or a game that you feel is worthyof conclusion here, please use the information on our “contact us” page to let us know.
Ainsworth Game Technology is an Australian company that’s been in business for 20+ years. The company is named after its founder, Len Ainsworth. The company is publicly listed under the codeAGI on the Australian stock market. They have headquarters in Newington, Sydney, Australia. We offer detailed reviews of their most famous games, including Dragon Lines, Eaglebucks, and GrandDragon.Amatic Industries
Amatic Industries is an international designer and manufacturer of slot machines games found in casinos all over the world. They’ve been in business since 1993. They offer more than just slots,though—they’re also one of the leading designers of electronic roulette games. The company has won multiple industry awards, including “Most Stylish Gaming Machine” at the Irish Gaming Show andthe Golden Dice Award at ICE. We offer comprehensive reviews of some of their best-love titles, including Admiral Nelson, Cool Diamonds, Eye of Ra, Lucky Coin and Wolf Moon.Amaya Gaming
Amaya Gaming is best-known as the Internet juggernaut which bought PokerStars, making them the largest online poker provider in the world. It also catapulted them into the leading position oflargest publicly traded gambling company in the world. They do work in partnership with other companies—for example, their partnership with Aristocrat enables players to play some of the mostfamous Australian poker machines (pokies) online. Some of their more popular slot machine games include Casinomeister, Forrest Gump, Jenga, Superman, and The Flash.Aristocrat Gaming Technology
Aristocrat Gaming Technology is another publicly traded company based out of Australia. (What can we say? Slot machines are really popular in that country, even if they call them “pokies”instead of “slots”.) The company was founded in 1953. They have licenses to operate in 240 different jurisdictions in 90 different countries throughout the world. Some of their better-knowngames include 50 Lions, Zorro, Sons of Anarchy, The Walking Dead, and Dumb and Dumber, among many others.Ash Gaming
Ash Gaming has been in business since 2002 and focuses on providing specific games to specific clients, especially those in the sports betting industry who want to expand their offerings totheir player base. They also focus primarily on the Internet market. They don’t have the most extensive list of games in the industry, but some of their games are popular, including Alice inWonderland, Life of Brian, Nostradamus, and Who Wants to Be a Millionaire.Bally Technologies
Bally Technologies is one of the oldest and best-known companies on this list. They’ve been in business since 1968, and they offer a huge range of games. If the name sounds familiar, it’sbecause the company is large enough to be involved in multiple aspects of the business. At one time, they were also popular providers of regular video games and pinball machines. They also havea casino in Las Vegas. They have a number of lucrative licensing deals, and they design and manufacture some of the following slot machines: Betty Boop, Double Dragon, Ducky Dynasty, Grease,Pawn Stars, Titanic, and ZZ Top.Barcrest Gaming
Barcrest Gaming is a UK company that’s been providing gambling machines to businesses since 1968. They were acquired by IGT in the late 1990s but were then sold to Scientific Games in 2011.Both IGT and Scientific Games saw the wisdom in letting the brand continue under its own name, which it still does. You’ll find pages on our site providing complete game details for thefollowing games: Crown Gems, Rainbow Riches, Thai Flower, and Wipeout.Betsoft Gaming
Betsoft Gaming is famous for their innovative and impressive 3D gaming products available on the Internet. We try to be as objective as possible when writing about any company on this site.Spend some time here, and you’ll see that we rarely “toot a company’s horn”, as it were. But the games from this provider are so much more impressive than anything else on the market that it’shard to not brag on them at least a little bit. They focus more on Internet gaming than land-based casino games. Some of the games from Betsoft Gaming that we especially enjoy include: AfterNight Falls, A Night in Paris, Dr. Jekyll and Mr. Hyde, Good Girl Bad Girl, and Greedy Goblins. You’ll find more of their games listed on our page devoted exclusively to their company.Blueprint Gaming
Blueprint Gaming is a provider of gaming machines to the UK market, but they’re actually owned by a German company, the Gauselmann Group. They focus on creating games for Internet and mobilegamblers. They have multiple unusual licenses, including slots with the following themes: Austin Powers, Bejeweled, Chuzzle, Peggle, Plants vs Zombies, and Zuma. You can read about any of thoseindividual games here on our site, as well as find more details about Blueprint Gaming on their corporate profile page here.
Updated on September 14th, 2020 by Bob Ciura
Sonesta beach resort & casino sharm el sheikh. As the saying goes, the house always wins. Casinos operate strong business models, as casinos earn a virtually guaranteed profit from the sum of the bets they receive. The relatively attractive economics of casinos make the industry worthy of a closer look.
Investors may be particularly intrigued by the earnings growth and dividends of the major casino stocks. The 4 major publicly-traded casino stocks all pay dividends to shareholders, but they are far from the safest dividend stocks around.
If you are looking for a safer basket of dividend growth stocks, consider the Dividend Aristocrats. They are an elite group of 65 stocks in the S&P 500 Index with 25+ years of rising dividends.
You can download an Excel spreadsheet of all 65 Dividend Aristocrats (with important financial metrics such as dividend yields, P/E ratios, and dividend payout ratios) by clicking the link below:
Click here to download your Dividend Aristocrats Excel Spreadsheet List now.
Casinos are not without a fair amount of risk. Casinos are highly vulnerable to recessions, as consumers typically cut back heavily on gaming when the economy enters a downturn. The four major casino stocks saw their earnings collapse during the Great Recession. A similar impact has taken place to start 2020 due to the coronavirus crisis, which has battered the casino industry.Top 10 Casino Gaming Companies
We have analyzed the major casino stocks in the Sure Analysis Research Database, which ranks stocks based upon the combination of their dividend yield, earnings-per-share growth potential and valuation to compute expected total returns. In this article, we will compare the expected 5-year total annual returns of the four major casino stocks.Table Of Contents
For this article, stocks are ranked in order of least attractive to most attractive. While 5-year expected returns are incorporated in the rankings, we have also utilized a qualitative screen based on balance sheet strength and overall business quality.
You can instantly jump to a particular section of the article using the links below:Casino Industry Overview
The casino industry is in severe distress right now. The spreading coronavirus and resulting global recession have taken their toll on the casino stocks. The large U.S. casinos are heavily reliant on Macau, the largest gaming market in the world and the only market in China where casinos are legal. As a result, these stocks are very sensitive to any developments that affect the gaming activity in Macau.
This was a significant concern several years ago. In 2014, China initiated an anti-corruption regulatory crackdown, which greatly reduced the gaming activity in the area. Fortunately for the casinos, the downturn lasted for approximately two years and gaming activity in Macau recovered thereafter. Then the gaming activity in Macau faced another headwind, namely the trade war between the U.S. and China.
This headwind lasted for only about a year but now Macau is facing its strongest challenge ever, the outbreak of coronavirus, which has caused a huge hit in the gaming business. Casinos were shut down for an extended period due to the coronavirus. Visa restrictions have also added to the decline in gaming activity in Macau.Best Casino Gaming Companies
As a result, gross gaming revenue in Macau plunged 94.5% in August, compared with the same month last year. Gross gaming revenue in Macau declined 81.6% through the first eight months of 2020. The high sensitivity of casino stocks to all the developments related to China and their pronounced cyclicality means that investors should pick casino stocks carefully.Top Casino Stock #4: Wynn Resorts (WYNN)
Wynn Resorts owns and operates Wynn Macau and the Wynn Palace in Macau, as well as Wynn Las Vegas and Encore in Las Vegas. Since Wynn Resorts is highly leveraged to the gaming activity in Macau, it saw its earnings collapse and it cut its dividend by 62% in 2015-2016 due to the Macau downturn that was caused by the anti-corruption regulatory crackdown in the area. But as Macau strongly recovered in the last three years, Wynn Resorts returned to growth.
Unfortunately, the company is now facing the headwind of coronavirus in all the regions in which it operates. Wynn Resorts reported earnings results for the second quarter on 8/4/2020. Revenue declined 95% year-over-year to $85.7 million, which was $190 million less than expected. The company lost $6.14 per share in the quarter, missing estimates by $1.23. Adjusted property EBITDA was a loss of $322.9 million compared to estimates of a loss of $314 million. This compared unfavorably to adjusted EBITDA of $480.6 million in the second quarter of 2019.
Results for Wynn Resorts were once again severely impacted by the COVID-19 pandemic as properties in Macau were closed for 15 days. Las Vegas operations didn’t open until June 4th.Wynn Palace revenues declined 98.6% as a result. Revenues for Wynn Macau decreased 97.8% while Las Vegas decreased 86% year-over-year. Wynn Resorts suspended its dividend in an effort to conserve capital. Consensus estimates call for a loss of $11.52 per share for 2020.Top Casino Gaming Companies Reviews
On the bright side, casinos are gradually reopening, and Wynn Resorts seems to have ample room to grow in the upcoming years thanks to its promising growth pipeline.
Source: Investor Presentation
The company has made progress in the design of Crystal Pavilion in Macau, which will be a major tourist attraction. In addition, Encore Boston Harbor opened in June-2019 and has exhibited strong performance so far so it has promising growth prospects ahead thanks to expected ramp-up in activity.
Moreover, the company has been caught off guard, with total current and long-term debt outstanding of $12.78 billion and cash and cash equivalents of $3.80 billion. Therefore, the stock is carrying an increased amount of risk right now due to its high level of debt.
However, we believe that the coronavirus crisis will not last beyond this year and we view the long-term growth prospects of the company as intact. We expect 4% annual EPS growth through 2025. Using the company’s current assets, return on assets of 5.6% over the last decade and share count, we believe Wynn Resorts has earnings power of $1.89. We will use this figure to calculate fair value and projected return.
Based off of the earnings power estimate for 2020, the stock is currently trading at a P/E ratio of 44, which is higher than its historical average of 30.1. However, the stock traded at abnormally high P/E ratios in some years due to depressed earnings in those years.
For instance, the abnormally rich valuation of the stock during 2015-2017 resulted from the market’s view that the downturn in Macau was temporary. Our target P/E ratio of 18 reflects uncertainty regarding Macau and the coronavirus. If shares reverted to our target P/E by 2025, then valuation would be a 16% headwind to annual returns over this time period.
If the stock reaches our fair valuation level over the next five years, it would reduce shareholder returns by 16%, effectively wiping out earnings growth and dividends over that time period. The stock is markedly volatile due to its high debt load, which is an added risk factor.
As a result, only those who can stomach extreme stock price volatility and have confidence in the ability of Wynn Resorts to navigate through the current crisis should consider buying the stock.Top Casino Stock #3: MGM Resorts (MGM)
MGM Resorts owns and operates casinos, hotels and conference halls in the U.S. and China. The company has the least exposure to Macau in this group of stocks. As a result, it suffered much less than its peers from the trade war between the U.S. and China and the protests of people in Macau a few months ago.
However, the company is highly exposed to the outbreak of coronavirus, just like its peers. Due to the rapid spread of the coronavirus, MGM Resorts suspended all its casino operations in Las Vegas on March 16th and did not accept hotel reservations for the dates prior to May 1st. The company also closed its casino in Maryland. Yellowhead casino edmonton poker room.
In late July, MGM Resorts reported (7/30/20) financial results for the second quarter of fiscal 2020. The company began reopening its U.S.properties in the quarter but its revenue plunged -91% over last year’s quarter due to the suspension of the operations of the company in the U.S. and a collapse in gaming revenues in Macau caused by travel restrictions and social distancing.
Source: Investor Presentation
As a result, MGM Resorts switched from a profit of $0.23 per share in last year’s quarter to an adjusted loss of -$1.52 per share.
Due to the unprecedented downturn that has resulted from the pandemic, MGM Resorts cut its dividend by 98% in April. Moreover, in May, it issued $750 million of 5-year bonds at 6.750%. The high interest rate reflects the desperation of the company for funds and the high debt load of the company. Net debt is $20.0 billion, which is nearly twice the current market cap of the stock.
On the positive side, on August 20th, 2020, IAC (IAC) reported a 12% stake in MGM Resorts for approximately $1 billion. IAC has a portfolio of brands and digital expertise, which is expected to help MGM Resorts leverage its digital assets. IAC will join the Board of Directors of MGM Resorts. The stock jumped 12% on the announcement.
Nevertheless, due to the headwind of coronavirus, along with a huge debt load, shareholders should not expect a material boost in dividends and share repurchases for the foreseeable future. That said, the company has a positive long-term outlook for conventions and sports betting in the domestic market, as well as the ramp-up of the recently-built MGM Cotai resort, MGM Springfield, and Park MGM.
As soon as the coronavirus crisis comes to an end, MGM Resorts will benefit from these growth drivers. The company will also enhance its earnings growth via its initiative “MGM 2020”, which aims to expand margins by reducing operating costs and enhancing the efficiency of the company.
Due to the headwind from coronavirus, we expect MGM Resorts to report a net loss in 2020. Earnings-per-share are expected to gradually turn positive, with expected annual growth of 5% through 2025. After the massive dividend reduction, returns from dividends will be negligible until the full dividend is restored. Finally, a contracting valuation multiple could be an additional headwind for shareholders. Overall, we expect negative total returns in the mid-single-digits over the next five years.Top Casino Stock #2: Melco Resorts (MLCO)
Melco Resorts owns and operates casino gaming and entertainment casino resort facilities in Asia. As Melco Resorts is the most leveraged to the gaming activity in Macau in this group of stocks, it is the most vulnerable company to the downturn in the area due to the outbreak of coronavirus.
Melco Resorts will greatly benefit as the US slowly returns to a more ‘normal’ level of activity as COVID-19 fears and cases hopefully decline. A COVID-19 vaccine would likely be a major boost for the company.
In 2019, Melco Resorts grew its revenue 11% and its earnings per share 15%, primarily thanks to its strong performance in the mass market table gaming activity. But conditions have predictably reversed, with second-quarter revenue declining 88% and adjusted property EBITDA declining to a loss of $156.3 million.
Source: Investor Presentation
As soon as the effect of coronavirus begins to fade, the company has promising growth prospects ahead. It will benefit from the ramp-up of activity in its Morpheus Resort, which opened in mid-2018, and attract an increasing number of visitors in Cotai thanks to improvements in mass transportation.
Melco Resorts is also expanding its City of Dreams in Macau and is taking steps to open an integrated resort in Yokohama, Japan. All these initiatives are likely to be significant growth drivers as soon as Macau returns to normal.
On the other hand, due to its extreme leverage to gaming activity in Macau, the stock is highly vulnerable to any negative development related to coronavirus. Therefore, despite the promising growth prospects, we hold modest expectations for Melco, due to its extreme leverage to the activity in Macau.
It is worth noting that the gaming
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Combined, the top 3 companies accounted for 42% of the total social casino game market, while the top 15 accounted for roughly 83%. Top Social Casino Publishers in 2016 Rank. The casino industry in the United States is one of the biggest in the world, with estimated revenues of around $60 billion every year. It is hardly surprising then that some of the biggest gambling firms in the world are located in the US. Of the 12 biggest casino gaming companies in existence, more than six are based in the US.
*Top 10 Casino Gaming Companies
*Best Casino Gaming Companies
*Top Casino Gaming Companies Reviews
*Top Casino Gaming Companies Stocks
*Top 10 Casino Gaming Companies In The World
For the purposes of organizing our detailed reviews of various slots games, we’ve organized this section of our site according to which companies design and manufacture which games. Slot machineproviders like IGT have been around for decades and serve both the land-based and online casino markets. Others, like Realtime Gaming, have been around for less than a decade and only serve theInternet market.
Clicking on the links to the providers’ pages will take you to the information page on that company. That page will include a list of the games that company provides. On this page, we providebrief overviews of each company, including a couple of examples of well-known games that each company produces.
We’ve done our best to make this section as comprehensive as possible, but there are literally thousands of slots games available. If we’ve left out a provider or a game that you feel is worthyof conclusion here, please use the information on our “contact us” page to let us know.
Ainsworth Game Technology is an Australian company that’s been in business for 20+ years. The company is named after its founder, Len Ainsworth. The company is publicly listed under the codeAGI on the Australian stock market. They have headquarters in Newington, Sydney, Australia. We offer detailed reviews of their most famous games, including Dragon Lines, Eaglebucks, and GrandDragon.Amatic Industries
Amatic Industries is an international designer and manufacturer of slot machines games found in casinos all over the world. They’ve been in business since 1993. They offer more than just slots,though—they’re also one of the leading designers of electronic roulette games. The company has won multiple industry awards, including “Most Stylish Gaming Machine” at the Irish Gaming Show andthe Golden Dice Award at ICE. We offer comprehensive reviews of some of their best-love titles, including Admiral Nelson, Cool Diamonds, Eye of Ra, Lucky Coin and Wolf Moon.Amaya Gaming
Amaya Gaming is best-known as the Internet juggernaut which bought PokerStars, making them the largest online poker provider in the world. It also catapulted them into the leading position oflargest publicly traded gambling company in the world. They do work in partnership with other companies—for example, their partnership with Aristocrat enables players to play some of the mostfamous Australian poker machines (pokies) online. Some of their more popular slot machine games include Casinomeister, Forrest Gump, Jenga, Superman, and The Flash.Aristocrat Gaming Technology
Aristocrat Gaming Technology is another publicly traded company based out of Australia. (What can we say? Slot machines are really popular in that country, even if they call them “pokies”instead of “slots”.) The company was founded in 1953. They have licenses to operate in 240 different jurisdictions in 90 different countries throughout the world. Some of their better-knowngames include 50 Lions, Zorro, Sons of Anarchy, The Walking Dead, and Dumb and Dumber, among many others.Ash Gaming
Ash Gaming has been in business since 2002 and focuses on providing specific games to specific clients, especially those in the sports betting industry who want to expand their offerings totheir player base. They also focus primarily on the Internet market. They don’t have the most extensive list of games in the industry, but some of their games are popular, including Alice inWonderland, Life of Brian, Nostradamus, and Who Wants to Be a Millionaire.Bally Technologies
Bally Technologies is one of the oldest and best-known companies on this list. They’ve been in business since 1968, and they offer a huge range of games. If the name sounds familiar, it’sbecause the company is large enough to be involved in multiple aspects of the business. At one time, they were also popular providers of regular video games and pinball machines. They also havea casino in Las Vegas. They have a number of lucrative licensing deals, and they design and manufacture some of the following slot machines: Betty Boop, Double Dragon, Ducky Dynasty, Grease,Pawn Stars, Titanic, and ZZ Top.Barcrest Gaming
Barcrest Gaming is a UK company that’s been providing gambling machines to businesses since 1968. They were acquired by IGT in the late 1990s but were then sold to Scientific Games in 2011.Both IGT and Scientific Games saw the wisdom in letting the brand continue under its own name, which it still does. You’ll find pages on our site providing complete game details for thefollowing games: Crown Gems, Rainbow Riches, Thai Flower, and Wipeout.Betsoft Gaming
Betsoft Gaming is famous for their innovative and impressive 3D gaming products available on the Internet. We try to be as objective as possible when writing about any company on this site.Spend some time here, and you’ll see that we rarely “toot a company’s horn”, as it were. But the games from this provider are so much more impressive than anything else on the market that it’shard to not brag on them at least a little bit. They focus more on Internet gaming than land-based casino games. Some of the games from Betsoft Gaming that we especially enjoy include: AfterNight Falls, A Night in Paris, Dr. Jekyll and Mr. Hyde, Good Girl Bad Girl, and Greedy Goblins. You’ll find more of their games listed on our page devoted exclusively to their company.Blueprint Gaming
Blueprint Gaming is a provider of gaming machines to the UK market, but they’re actually owned by a German company, the Gauselmann Group. They focus on creating games for Internet and mobilegamblers. They have multiple unusual licenses, including slots with the following themes: Austin Powers, Bejeweled, Chuzzle, Peggle, Plants vs Zombies, and Zuma. You can read about any of thoseindividual games here on our site, as well as find more details about Blueprint Gaming on their corporate profile page here.
Updated on September 14th, 2020 by Bob Ciura
Sonesta beach resort & casino sharm el sheikh. As the saying goes, the house always wins. Casinos operate strong business models, as casinos earn a virtually guaranteed profit from the sum of the bets they receive. The relatively attractive economics of casinos make the industry worthy of a closer look.
Investors may be particularly intrigued by the earnings growth and dividends of the major casino stocks. The 4 major publicly-traded casino stocks all pay dividends to shareholders, but they are far from the safest dividend stocks around.
If you are looking for a safer basket of dividend growth stocks, consider the Dividend Aristocrats. They are an elite group of 65 stocks in the S&P 500 Index with 25+ years of rising dividends.
You can download an Excel spreadsheet of all 65 Dividend Aristocrats (with important financial metrics such as dividend yields, P/E ratios, and dividend payout ratios) by clicking the link below:
Click here to download your Dividend Aristocrats Excel Spreadsheet List now.
Casinos are not without a fair amount of risk. Casinos are highly vulnerable to recessions, as consumers typically cut back heavily on gaming when the economy enters a downturn. The four major casino stocks saw their earnings collapse during the Great Recession. A similar impact has taken place to start 2020 due to the coronavirus crisis, which has battered the casino industry.Top 10 Casino Gaming Companies
We have analyzed the major casino stocks in the Sure Analysis Research Database, which ranks stocks based upon the combination of their dividend yield, earnings-per-share growth potential and valuation to compute expected total returns. In this article, we will compare the expected 5-year total annual returns of the four major casino stocks.Table Of Contents
For this article, stocks are ranked in order of least attractive to most attractive. While 5-year expected returns are incorporated in the rankings, we have also utilized a qualitative screen based on balance sheet strength and overall business quality.
You can instantly jump to a particular section of the article using the links below:Casino Industry Overview
The casino industry is in severe distress right now. The spreading coronavirus and resulting global recession have taken their toll on the casino stocks. The large U.S. casinos are heavily reliant on Macau, the largest gaming market in the world and the only market in China where casinos are legal. As a result, these stocks are very sensitive to any developments that affect the gaming activity in Macau.
This was a significant concern several years ago. In 2014, China initiated an anti-corruption regulatory crackdown, which greatly reduced the gaming activity in the area. Fortunately for the casinos, the downturn lasted for approximately two years and gaming activity in Macau recovered thereafter. Then the gaming activity in Macau faced another headwind, namely the trade war between the U.S. and China.
This headwind lasted for only about a year but now Macau is facing its strongest challenge ever, the outbreak of coronavirus, which has caused a huge hit in the gaming business. Casinos were shut down for an extended period due to the coronavirus. Visa restrictions have also added to the decline in gaming activity in Macau.Best Casino Gaming Companies
As a result, gross gaming revenue in Macau plunged 94.5% in August, compared with the same month last year. Gross gaming revenue in Macau declined 81.6% through the first eight months of 2020. The high sensitivity of casino stocks to all the developments related to China and their pronounced cyclicality means that investors should pick casino stocks carefully.Top Casino Stock #4: Wynn Resorts (WYNN)
Wynn Resorts owns and operates Wynn Macau and the Wynn Palace in Macau, as well as Wynn Las Vegas and Encore in Las Vegas. Since Wynn Resorts is highly leveraged to the gaming activity in Macau, it saw its earnings collapse and it cut its dividend by 62% in 2015-2016 due to the Macau downturn that was caused by the anti-corruption regulatory crackdown in the area. But as Macau strongly recovered in the last three years, Wynn Resorts returned to growth.
Unfortunately, the company is now facing the headwind of coronavirus in all the regions in which it operates. Wynn Resorts reported earnings results for the second quarter on 8/4/2020. Revenue declined 95% year-over-year to $85.7 million, which was $190 million less than expected. The company lost $6.14 per share in the quarter, missing estimates by $1.23. Adjusted property EBITDA was a loss of $322.9 million compared to estimates of a loss of $314 million. This compared unfavorably to adjusted EBITDA of $480.6 million in the second quarter of 2019.
Results for Wynn Resorts were once again severely impacted by the COVID-19 pandemic as properties in Macau were closed for 15 days. Las Vegas operations didn’t open until June 4th.Wynn Palace revenues declined 98.6% as a result. Revenues for Wynn Macau decreased 97.8% while Las Vegas decreased 86% year-over-year. Wynn Resorts suspended its dividend in an effort to conserve capital. Consensus estimates call for a loss of $11.52 per share for 2020.Top Casino Gaming Companies Reviews
On the bright side, casinos are gradually reopening, and Wynn Resorts seems to have ample room to grow in the upcoming years thanks to its promising growth pipeline.
Source: Investor Presentation
The company has made progress in the design of Crystal Pavilion in Macau, which will be a major tourist attraction. In addition, Encore Boston Harbor opened in June-2019 and has exhibited strong performance so far so it has promising growth prospects ahead thanks to expected ramp-up in activity.
Moreover, the company has been caught off guard, with total current and long-term debt outstanding of $12.78 billion and cash and cash equivalents of $3.80 billion. Therefore, the stock is carrying an increased amount of risk right now due to its high level of debt.
However, we believe that the coronavirus crisis will not last beyond this year and we view the long-term growth prospects of the company as intact. We expect 4% annual EPS growth through 2025. Using the company’s current assets, return on assets of 5.6% over the last decade and share count, we believe Wynn Resorts has earnings power of $1.89. We will use this figure to calculate fair value and projected return.
Based off of the earnings power estimate for 2020, the stock is currently trading at a P/E ratio of 44, which is higher than its historical average of 30.1. However, the stock traded at abnormally high P/E ratios in some years due to depressed earnings in those years.
For instance, the abnormally rich valuation of the stock during 2015-2017 resulted from the market’s view that the downturn in Macau was temporary. Our target P/E ratio of 18 reflects uncertainty regarding Macau and the coronavirus. If shares reverted to our target P/E by 2025, then valuation would be a 16% headwind to annual returns over this time period.
If the stock reaches our fair valuation level over the next five years, it would reduce shareholder returns by 16%, effectively wiping out earnings growth and dividends over that time period. The stock is markedly volatile due to its high debt load, which is an added risk factor.
As a result, only those who can stomach extreme stock price volatility and have confidence in the ability of Wynn Resorts to navigate through the current crisis should consider buying the stock.Top Casino Stock #3: MGM Resorts (MGM)
MGM Resorts owns and operates casinos, hotels and conference halls in the U.S. and China. The company has the least exposure to Macau in this group of stocks. As a result, it suffered much less than its peers from the trade war between the U.S. and China and the protests of people in Macau a few months ago.
However, the company is highly exposed to the outbreak of coronavirus, just like its peers. Due to the rapid spread of the coronavirus, MGM Resorts suspended all its casino operations in Las Vegas on March 16th and did not accept hotel reservations for the dates prior to May 1st. The company also closed its casino in Maryland. Yellowhead casino edmonton poker room.
In late July, MGM Resorts reported (7/30/20) financial results for the second quarter of fiscal 2020. The company began reopening its U.S.properties in the quarter but its revenue plunged -91% over last year’s quarter due to the suspension of the operations of the company in the U.S. and a collapse in gaming revenues in Macau caused by travel restrictions and social distancing.
Source: Investor Presentation
As a result, MGM Resorts switched from a profit of $0.23 per share in last year’s quarter to an adjusted loss of -$1.52 per share.
Due to the unprecedented downturn that has resulted from the pandemic, MGM Resorts cut its dividend by 98% in April. Moreover, in May, it issued $750 million of 5-year bonds at 6.750%. The high interest rate reflects the desperation of the company for funds and the high debt load of the company. Net debt is $20.0 billion, which is nearly twice the current market cap of the stock.
On the positive side, on August 20th, 2020, IAC (IAC) reported a 12% stake in MGM Resorts for approximately $1 billion. IAC has a portfolio of brands and digital expertise, which is expected to help MGM Resorts leverage its digital assets. IAC will join the Board of Directors of MGM Resorts. The stock jumped 12% on the announcement.
Nevertheless, due to the headwind of coronavirus, along with a huge debt load, shareholders should not expect a material boost in dividends and share repurchases for the foreseeable future. That said, the company has a positive long-term outlook for conventions and sports betting in the domestic market, as well as the ramp-up of the recently-built MGM Cotai resort, MGM Springfield, and Park MGM.
As soon as the coronavirus crisis comes to an end, MGM Resorts will benefit from these growth drivers. The company will also enhance its earnings growth via its initiative “MGM 2020”, which aims to expand margins by reducing operating costs and enhancing the efficiency of the company.
Due to the headwind from coronavirus, we expect MGM Resorts to report a net loss in 2020. Earnings-per-share are expected to gradually turn positive, with expected annual growth of 5% through 2025. After the massive dividend reduction, returns from dividends will be negligible until the full dividend is restored. Finally, a contracting valuation multiple could be an additional headwind for shareholders. Overall, we expect negative total returns in the mid-single-digits over the next five years.Top Casino Stock #2: Melco Resorts (MLCO)
Melco Resorts owns and operates casino gaming and entertainment casino resort facilities in Asia. As Melco Resorts is the most leveraged to the gaming activity in Macau in this group of stocks, it is the most vulnerable company to the downturn in the area due to the outbreak of coronavirus.
Melco Resorts will greatly benefit as the US slowly returns to a more ‘normal’ level of activity as COVID-19 fears and cases hopefully decline. A COVID-19 vaccine would likely be a major boost for the company.
In 2019, Melco Resorts grew its revenue 11% and its earnings per share 15%, primarily thanks to its strong performance in the mass market table gaming activity. But conditions have predictably reversed, with second-quarter revenue declining 88% and adjusted property EBITDA declining to a loss of $156.3 million.
Source: Investor Presentation
As soon as the effect of coronavirus begins to fade, the company has promising growth prospects ahead. It will benefit from the ramp-up of activity in its Morpheus Resort, which opened in mid-2018, and attract an increasing number of visitors in Cotai thanks to improvements in mass transportation.
Melco Resorts is also expanding its City of Dreams in Macau and is taking steps to open an integrated resort in Yokohama, Japan. All these initiatives are likely to be significant growth drivers as soon as Macau returns to normal.
On the other hand, due to its extreme leverage to gaming activity in Macau, the stock is highly vulnerable to any negative development related to coronavirus. Therefore, despite the promising growth prospects, we hold modest expectations for Melco, due to its extreme leverage to the activity in Macau.
It is worth noting that the gaming
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