NEW YORK ( TheStreet) -- Atlantic City may be on the verge of going bust due to casino overcapacity and new regional competition, but gambling in Las Vegas is hot. That is, for some companies.
Boyd Gaming (BYD), which operates nine hotels and casinos in Las Vegas, in addition to having a 50% membership interest in Atlantic City's Borgata, is an example of competitive pressures overshadowing a recovering gambling backdrop in Las Vegas. Investors should be particularly concerned.
Boyd Gaming posted adjusted earnings per share of 5 cents a share, or 3 cents below Wall Street consensus expectations as compiled by Bloomberg. The disappointing results were fueled by revenue and adjusted operating income declines at the company's Las Vegas Locals and Downtown (Vegas) segments, which theoretically should be partaking in the region's recovery.
Management signaled the situation is unlikely to reverse course in the near-term. Boyd Gaming lowered its full year adjusted operating income guidance to a range of $580 million to $600 million from $600 million to $620 million, citing weakness in casual play games and a "tough" operating environment.
Las Vegas Sands', on the other hand, reported hotel average daily room rate (ADR) increased a strong 8.8% in the second quarter, with revenue per available room (RevPar) increasing 6.9%. Gambling revenue was relatively flat year over year at $104.3 million.
Boyd's second-quarter performance runs counter to trends in the Las Vegas gaming market. In June, Las Vegas strip gambling proceeds spiked 22%, accelerating from 17.3% and 3.19% increases in May and April, respectively, according to Bloomberg data. Gaming revenue statewide in Nevada increased 14% in June, almost two times that of May, and far removed from April's 0.3% drop.