Looking back on casino operator stocks' Q1 earnings, we examine this quarter's best and worst performers, including PENN Entertainment (NASDAQ:PENN) and its peers.
Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.
The 9 casino operator stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 0.5%. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and casino operator stocks have held roughly steady amidst all this, with share prices up 2.1% on average since the previous earnings results.
PENN Entertainment (NASDAQ:PENN) Established in 1982, PENN Entertainment (NASDAQ:PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.
PENN Entertainment reported revenues of $1.61 billion, down 4% year on year, falling short of analysts' expectations by 1.1%. Overall, it was a weak quarter for the company with a miss of analysts' earnings estimates.
Jay Snowden, Chief Executive Officer and President, said: “Our property level performance showed resilience this quarter, with stable trends continuing into April following portfolio-wide severe weather through mid-February. Meanwhile, ESPN BET continues to drive strong top of funnel demand due to the reach and affinity for the ESPN brand, which led to record online sports betting handle and iCasino gross gaming revenue in the quarter. However, Interactive segment results were negatively impacted primarily by unfavorable hold from major sporting events. We look forward to unveiling additional product enhancements and unique media integrations with ESPN ahead of the 2024 football season. Our improved online product offering will help engage, reactivate, and retain our expanding database, while also advancing our strategy to create a highly differentiated experience for sports fans and sports bettors.
The stock is up 14% since reporting and currently trades at $18.70.
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Best Q1: MGM Resorts (NYSE:NYSE:MGM) Operating several properties on the Las Vegas Strip, MGM Resorts (NYSE:MGM) is a global hospitality and entertainment company known for its resorts and casinos.
MGM Resorts reported revenues of $4.38 billion, up 13.2% year on year, outperforming analysts' expectations by 3.7%. It was a very strong quarter for the company with an impressive beat of analysts' earnings estimates and a decent beat of analysts' Casino revenue estimates.
MGM Resorts pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 14% since reporting. It currently trades at $45.31.
Weakest Q1: Caesars Entertainment (NASDAQ:CZR) Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ:CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties.
Caesars Entertainment reported revenues of $2.74 billion, down 3.1% year on year, falling short of analysts' expectations by 2.8%. It was a weak quarter for the company with a miss of analysts' earnings estimates.
Caesars Entertainment posted the weakest performance against analyst estimates in the group. Interestingly, the stock is up 2% since the results and currently trades at $36.60.
Wynn Resorts (NASDAQ:WYNN) Founded by the former Mirage Resorts CEO, Wynn Resorts (NASDAQ:WYNN) is a global developer and operator of high-end hotels and casinos, known for its luxurious properties and premium guest services.
Wynn Resorts reported revenues of $1.86 billion, up 30.9% year on year, surpassing analysts' expectations by 3.5%. Taking a step back, it was a very strong quarter for the company with a decent beat of analysts' earnings estimates.
Wynn Resorts delivered the fastest revenue growth among its peers. The stock is down 14.1% since reporting and currently trades at $83.52.
Red Rock Resorts (NASDAQ:RRR) Founded in 1976, Red Rock Resorts (NASDAQ:RRR) operates a range of casino resorts and entertainment properties, primarily in the Las Vegas metropolitan area.
Red Rock Resorts reported revenues of $488.9 million, up 12.7% year on year, in line with analysts' expectations. Taking a step back, it was a weak quarter for the company with a miss of analysts' earnings estimates.
The stock is up 8.2% since reporting and currently trades at $58.79.
This content was originally published on Stock Story
