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Posted at: April 12, 2020, 6:31am
Updated on April 12, 2024 at 06:31h
The regional casino is facing what Deutsche Bank analyst Carlo Santarelli calls a “slow bleeding” when it comes gross gaming revenues (GGR). This indicates that new outlets are the main source of growth, and not an increase in same-store sales.
Investors, analysts, and traders were optimistic that following the poor weather of January which kept many visitors home. regional casino GGRSantarelli warned that this view may not be valid.
Analyst: “When looking forward to 2Q24, and beyond we think that the notion that compares would be easier will likely manifest itself in an improvement in cadence in GGR growth is misguided in some way,” noted the analyst. Although compares may ease in the second quarter, we do not model a return to growth as we still see negative, but moderate comparisons.
Although the Las Vegas Strip is still a hive of activity, signs have emerged that macroeconomic factors such as high inflation and interest rates are impacting some casinos in the Midwest. Six out of nine Atlantic City casinos, NJ, are also experiencing a decline. experienced profit declines Last year, iGaming grew in popularity among locals.
Some Casinos in Regional Areas Display Deceptive Numbers
Colorado is the only state with regional casino gaming facilities that has experienced GGR growth in this past year. Ten other states have seen GGR decreases by more than 2%.
The March sales numbers for Michigan are bad, with a drop of 1.6%. In Illinois, the same-stores sales have dropped 6.7%, and this is attributed to new temporary venues such as Bally’s and Full House Resorts’s (NASDAQ:FLL).
Contributions Bally’s Chicago temporary casino Data from the Illinois Gaming Board (IGB), however, shows the Illinois casino was only able to outperform two other casinos within the state when it comes to GGR in March.
Santarelli said that while GGR’s promotional strategy can sometimes mislead or lull the investor into a false feeling of security, it has not changed materially since 1Q24. We continue to observe certain operators acting in a promotional manner, but overall, the behavior has not changed on a quarter-to-quarter basis.
You will like regional casino stocks
Santarelli’s preference was for Boyd Gaming stock (NYSE: BYD), Golden Entertainment stocks (NASDAQ GDEN), or Red Rock Resorts shares (NASDAQ RRR) among regional casino companies. The three companies have a lot in common, including a heavy focus on the Las Vegas market.
Boyd is the only one of those three to operate gaming establishments outside Las Vegas Valley. The largest gaming operator in Downtown Las Vegas, the company has some positive factors.
We believe that valuations and buyside sentiment will likely lead to a positive risk-reward for several companies. Santarelli concluded that BYD is a good choice among regional / drive to operators. This is because: “1) the balance sheet health and returns to capital, 2) exposure to the local markets in LV, 3) expansion of the Downtown market segment and 4) FanDuel”
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