Casino Stocks 2014 Forecast

29 Sep

Casino resort

Casino stocks appear to be a smart investment. The mixture of casinos themselves and the surrounding entertainment facilities such as hotels and shows make the casino industry a profitable business. Nonetheless, the future of casino stocks is in many ways closely tied with the development of Macau, known by many as the “Vegas of China,” a special administrative region in the country in which casinos form a major part of the economy.  Although traditional casino centres such as Las Vegas continue to thrive, analysts are predicting a 12-15% growth in Macau casino revenue.

Of course, given that the economic success of Macau is so closely tied to the Chinese economy, much will depend on China’s wider financial climate. Although there is plenty of optimism regarding China’s overall prospects, disappointing GDP growth during the last quarter have begun to raise eyebrows. As a result, some analysts have pointed out that Las Vegas Sands is extremely exposed to the Chinese market in comparison to its rivals and as a result may not be the wisest investment in 2014. Having said that, the company remains a giant of the casino industry and still posted significant growth on its Macau ventures, which include the flagship Venetian casino, during the last quarter.

Looking beyond Las Vegas Sands, MGM Resorts is looking to make a big push in Macau during the coming year. The company already owns a significant portion of the Las Vegas strip and has recorded increased casino revenue and good profits on hotel rooms, which continue to increase in price. Macau is the next growth target. It is also well worth noting that MGM Resorts is prioritising the potentially lucrative online casino market which is beginning to make some waves in the United States, having just gone live in New Jersey. With plenty of payments methods in online casinos, there seems to be plenty of opportunity for profit. MGM is acutely aware of the online potential of its popular industry name, which also has the Bellagio brand attached to it.

Interestingly, Wynn Resorts has not taken such a keen interest in the online market and appears to be content to focus on the destination resorts owned by the company and its subsidiaries, which are based mainly in Las Vegas and also Macau. Recent results appear to have been disappointing. Although profits as a whole increased impressively, most of this was thanks to casino wins. The hotels themselves are not generating the kind of revenue that the company would like to see, especially in Las Vegas.

Another big player in the casino industry is Pinnacle Entertainment which owns and operates casinos and related hospitality facilities across the United States. Unlike some of its competitors, the company’s assets are spread much further afield than just Las Vegas. Revenue has been weaker than expected of late and much of this is down to a rise in expenses when rivals are busy reducing their costs. Nonetheless, this appears to be a transitional phase for the company and some pundits are placing plenty of faith in new CEO Anthony Sanfilippo to turn things around. Liquidity remains strong and there is plenty of room for growth, making Pinnacle Entertainment a somewhat unlikely prospect for 2014.

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