Best Casino Companies To Watch In Right Now

As expected, Cotai is driving Las Vegas Sands' (NYSE: LVS  ) results to record levels on the back of massive mass-market growth. The company reported earnings last night, and revenue grew 19.5%, to $3.30 billion, and earnings per share rose $0.01, to $0.71. The bottom-line comparison was heavily affected by a lucky quarter last year, which I'll cover below.�

Growth on Cotai continues
It's no surprise that Cotai was the driver of Las Vegas Sands' numbers. Last week, Wynn Resorts�reported earnings, and showed only 4.4% revenue growth versus 14.8% growth for Macau as a whole. You could see a good quarter forming for both Las Vegas Sands and Melco Crown, which are the only two U.S.-traded companies with exposure to Cotai.�

The Venetian Macau continues to be the driver of results despite Sands Cotai Central being a newer resort. Revenue rose 12.9%, to $872.2 million, at The Venetian Macau during the first quarter, and EBITDA jumped 23.6%, to $348.5 million. Interestingly, Sands Cotai Central only generated $131.5 million in EBITDA despite being almost completely open during the quarter, and Four Seasons Macau's EBITDA dropped 20.6%, to $53.6 million. Sands Cotai Central has a nearly identical number of tables as The Venetian Macau, so I expected revenue to trend across the street to the new casino.

Best Casino Companies To Watch In Right Now: MGM Resorts International(MGM)

MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Goodwin]

  MGM Resorts International(MGM) has the most exposure to the Las Vegas market, making it a bet only for those with thick skin.

  For the second quarter, the casino operator lost $883.5 million, or $2 a share, compared with a loss of $212.5 million, or 60 cents, in the year-ago period.

  A majority of the loss was attributed to a $1.12 billion writedown on its investment in CityCenter in Las Vegas. This is the third time MGM has had to write down CityCenter, as the casino has seen little improvement in operating profit since it opened in December. The $8.5 billion development took a loss of $128 million.

  Excluding this writedown, MGM actually lost 35 cents a share, still significantly more than analysts estimates of a 24-cent loss. MGM's revenue rose 3% to $1.54 billion from $1.49 billion, ahead of analysts' estimates of $1.46 billion.

  Revenue-per-available room on the Las Vegas Strip decreased 2%, although Bellagio and MGM Grand showed improvement, the company said. Occupancy levels slipped to 93% from 94% while the average daily rate fell a dollar to $110. "The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery," Chief Executive Officer Jim Murren said in a statement.

  Some of MGM's losses in Las Vegas were offset by its joint venture in Macau with Pansy Ho. MGM Macau earned $40 million, compared with a loss of $8 million last year

  Outside of Vegas, MGM said last week that it agreed to sell land from its Borgata hotel in Atlantic City for $73 million to Vornado Realty Trust and Geyser Holdings. The Borgata land, which is co-owned with Boyd Gaming(BYD), is about 11.3 acres, which would translate into about $6.5 million per acre.

  The transaction still needs to be approved by New Jersey regulators, and is expected to close by the fourth quarter. Once this transaction is complete, MGM will still own about 85 acres of developable land in Atlantic City.

  Earlier in the year, MGM said it planned t! o divest its 50% stake in the Atlantic City casino, which is currently in trust. The casino operator is still in talks with potential buyers of Borgata casino, and hotel and investors will be waiting for an update on its progress when second-quarter earnings are released.

  "We view this [deal] as a very modest positive in that there are still buyers of Atlantic City assets out there, at least at the right price," J.P. Morgan analyst Joseph Greff wrote in a note. "We don't necessarily interpret [the] news as any indication that MGM is closer to selling its 50% stake in Borgata."

• [By Hawkinvest]

  MGM Resorts International (MGM) is one of the world's largest hotel and casino companies, based in Las Vegas. Since December, MGM shares have been trading in a range of about $9, to almost $15 per share. The stock is now at the upper limit of the recent trading range which means that the risk of holding or buying this stock right now, could be elevated. MGM shares have rallied with the markets but appear extended and vulnerable to a sell-off. The company has a heavy debt load and it has been reporting losses. The balance sheet has about $13.45 billion in debt and only about $1.97 billion in cash. MGM could be impacted by higher oil prices because many consumers could cut back on spending if they go to Las Vegas, and some might decide not to go at all, and instead opt for a "staycation." With MGM facing challenges and the shares near recent highs, it could make sen se to sell now and buy on dips later this year.

  Here are some key points for MGM:

  Current share price: $14.18

  The 52 week range is $7.40 to $16.05

  Earnings estimates for 2011: a loss of 53 cents per share

  Earnings estimates for 2012: a loss of 39 cents per share

  Annual dividend: none

Best Casino Companies To Watch In Right Now: (XTRN)

Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.

Hot Bank Companies To Invest In Right Now: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:

• [By Quickel]

  Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.

  But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.

  Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.

  During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.

  Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.

  Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.

  The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.

Best Casino Companies To Watch In Right Now: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Sherry Jim]

  Pinnacle Entertainment(PNK) swung to a loss in its second quarter, as costs rose.

  During the quarter, the regional casino operator lost $49.3 million, or 81 cents a share, compared with a profit of $4.7 million, or 8 cents, in the year-ago period for Pinnacle.

  Excluding items, Pinnacle actually lost 14 cents a share, 10 cents worse than analysts' estimates of a 4-cent loss.

  Pinnacle's revenue rose 8.5% to $273.6 million from $252.3 million, but also fell short of Wall Street's forecast of $284.4 million.

  Even though revenue was weaker, margins rebounded at all but one of Pinnacle's properties. "Margins are the story for Pinnacle ahead of any longer-term potential true rebound in the economy, and we continue to believe there are multiple opportunities for near-term operational improvements across the Pinnacle portfolio," Bain wrote in a note.

  At a time when most casino operators are striving to reduce costs to offset the decline in consumer spending, Pinnacle saw expenses rise 21% to $289.3 million. But Bain said Pinnacle is still in the early stages of cost-refining. "Given what we view as several areas of potential improvements in this regard, we believe Pinnacle is less dependent on an economic recovery than some of its regional peers," he wrote.

  J.P. Morgan analyst Joseph Greff also reaffirms his overweight rating on the stock, viewing Pinnacle as a transition story. "We continue to believe that new CEO Anthony Sanfilippo and team will drive increased operating efficiencies and allocate capital prudently," he wrote in a note.

  Greff praises Sanfilippo for shelving the Sugarcane Bay project and instead focusing on Baton Rouge.

  Pinnacle's liquidity remains strong, with $200 million in cash and $375 million of availability under its revolver

• [By Jeanine Poggi]

  Pinnacle Entertainment(PNK) was the great transition story of 2010, with shares spiking about 45% this year.

  The regional casino operator's most impressive story has been in its gross margins, as management, under the leadership of new CEO Anthony Sanfilippo, is in the process of increasing the company's operating efficiencies and prudently allocating capital. Analysts believe Pinnacle is in the early stages of this process, and will continue to drive revenue growth.

  In its third quarter, Pinnacle reported a surprise profit of 10 cents a share on an adjusted basis, better than consensus estimates of a loss of 7 cents. Revenue grew 15% to $287.8 million, while property-level margins reached 23.4%, also ahead of forecasts.

  Last month, Pinnacle purchased Cincinnati's River Downs Racetrack for $45 million. The deal includes 155 acres, 35 of which are still undeveloped. The transaction is expected to close by the end of the first quarter of 2011.

  This deal could generate significant returns in the event that Ohio decides to legalize video lottery terminals at racetracks, Santarelli said.

  Pinnacle is also in the process of looking for a buyer of its oceanfront land in Atlantic City, where it originally intended to build a $1.5 billion casino, before squelching plans. The casino operator bought the land in 2006 for $270 million from groups affiliated with Carl Icahn and later added another piece of land for $70 million.

  While the land's currently value is $38 million, Pinnacle insists it will not sell it on the cheap, holding out for the best deal.

  Pinnacle currently has $228 million in cash and $375 million of availability under its revolver.