NEW YORK (
) -- The casino market is slowly moving into positive territory, according to Moody's Investor Services.
The company upped its outlook on the gaming sector to stable from negative, saying overall credit conditions of the U.S. gaming industry will neither erode nor improve materially during the next 12 to 18 months.
"Although monthly gaming revenue by jurisdiction varies considerably, overall, U.S. gaming revenue was flat year-over-year in March and April 2010, and it appears the trend will hold for May," Keith Foley, senior vice president at Moody's said in a statement. "While not a stellar performance, it's a marked improvement over the consistent -- and often substantial -- declines of 2008 and 2009. It also has favorable implications for gaming company operating profits, a majority of which comes directly from slot machine and table game revenue."
Of course, some U.S. gaming companies will continue to experience operating profit declines in the near term, but Moody's predicts this trend will flatten during the second half of 2010 as 1) monthly gaming revenue demonstrates continued stability and 2) year-over-year comparisons begin to benefit more fully from aggressive cost-cutting actions taken in the second half of 2009.
Still, Moody's warns that its revised outlook does not suggest ratings of individual company will stabilize or improve. "Consumer spending on this highly discretionary form of entertainment will remain under pressure," Moody's said. "This will make it challenging for U.S. gaming sector conditions to materially improve from their very weak levels, and for many U.S. gaming companies to reduce their significant debt burdens."
Casino stocks are in the red Tuesday morning, with
Las Vegas Sands
falling 1.2% to $26.73,
down 1.5% to $10.38,
off 1.4% to $16.54 and
Penn National Gaming
losing 1.3% to $25.46.
-- Reported by Jeanine Poggi in New York.
Follow Jeanine Poggi on
and get more stock ideas and investing advice on our sister site,