Macau-Exposed Casino Stocks Get Dealt Poor Hand on Friday

NEW YORK (TheStreet) -- Casino-related stocks MGM Resorts (MGM), Las Vegas Sands (LVS), Wynn Resorts (WYNN) and Melco Crown (MPEL) dropped on Friday. On a trading day already plagued by market drops, these companies extended losses sparked after a JPMorgan report released Wednesday turned cautious.

In its report, JPMorgan analysts downgraded MGM China Holdings, MGM's Hong Kong-traded owner of its Macau casino, to "neutral". Analysts cautioned the Hong Kong-based casino industry was sufficiently valued. Wynn Resorts and Las Vegas Sands both own major properties in the region, while Melco is headquartered in Hong Kong.

"After adjusting price targets to take into account the new casino projects and FY14/15E estimates, we recommend that investors trim positions," wrote analysts Kenneth Fong and Daisy Lu.

JPMorgan kept Wynn and Las Vegas Sands as "overweight".

By late afternoon, MGM had tumbled 5% to $23.93, Las Vegas Sands had unloaded 5.6% to $74.33, Wynn tumbled 5.2% to $194.65, and Melco took off 6.5% to $39.02.

TheStreet Ratings team rates MGM RESORTS INTERNATIONAL as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate MGM RESORTS INTERNATIONAL (MGM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MGM's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 9.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 81.08% and other important driving factors, this stock has surged by 98.61% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • MGM RESORTS INTERNATIONAL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MGM RESORTS INTERNATIONAL swung to a loss, reporting -$3.61 versus $5.56 in the prior year. This year, the market expects an improvement in earnings (-$0.25 versus -$3.61).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, MGM RESORTS INTERNATIONAL's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $365.70 million or 2.48% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MGM RESORTS INTERNATIONAL has marginally lower results.

TheStreet Ratings team rates LAS VEGAS SANDS CORP as a Buy with a ratings score of A+. The team has this to say about their recommendation:

"We rate LAS VEGAS SANDS CORP (LVS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 31.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 80.95% and other important driving factors, this stock has surged by 55.99% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • LAS VEGAS SANDS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LAS VEGAS SANDS CORP increased its bottom line by earning $1.85 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($3.02 versus $1.85).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 79.2% when compared to the same quarter one year prior, rising from $349.78 million to $626.74 million.
  • 46.42% is the gross profit margin for LAS VEGAS SANDS CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.56% is above that of the industry average.

TheStreet Ratings team rates WYNN RESORTS LTD as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate WYNN RESORTS LTD (WYNN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WYNN's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 61.26% and other important driving factors, this stock has surged by 70.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WYNN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, WYNN RESORTS LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 37.91% is the gross profit margin for WYNN RESORTS LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.09% is above that of the industry average.
  • Net operating cash flow has increased to $370.53 million or 12.82% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.64%.

TheStreet Ratings team rates MELCO CROWN ENTMT LTD as a Buy with a ratings score of A-. The team has this to say about their recommendation:

"We rate MELCO CROWN ENTMT LTD (MPEL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 23.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.57, which clearly demonstrates the ability to cover short-term cash needs.
  • MELCO CROWN ENTMT LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MELCO CROWN ENTMT LTD increased its bottom line by earning $0.76 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.27 versus $0.76).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 71.1% when compared to the same quarter one year prior, rising from $104.87 million to $179.40 million.
  • Powered by its strong earnings growth of 68.42% and other important driving factors, this stock has surged by 127.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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