NEW YORK (TheStreet) -- Are all casino and gaming stocks poor investments? Believe it or not, there are some that are worse than others.
Last week Caesars Entertainment (CZR) filed for bankruptcy protection under Chapter 11 in a Chicago court for one of its subsidiaries -- Caesars Entertainment Operating Co., the unit that operates 44 of its gaming and resort properties in 13 states. The restructuring is intended to "significantly reduce long-term debt and annual interest payments, while providing for significant recoveries for creditors and ensuring no interruption of operations across the company's network of properties," according to a Jan. 15 release.
The gaming industry as a whole has been facing tough times. Gaming revenue coming out of Las Vegas and Atlantic City peaked in 2006 and have been dwindling ever since. Macau, which has been a source of explosive growth for gaming companies and now does seven times more business than Las Vegas, will see its first year of negative growth in 2014 since it first started collecting such numbers in 2002.
It should be no surprise then that casino stocks are among the worst rated according to TheStreet Ratings, TheStreet's proprietary stock rating tool, which projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 30 major data points, TheStreet Ratings uses a quantitative approach to rating stocks. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
The 11 stocks on the list have "sell" ratings, with C- or worse grade from TheStreet Ratings. Here's the list.
11. Dover Downs Gaming & Entertainment (DDE)
Rating: Sell, D+
2014 Return: -43.2%
Dover Downs Gaming & Entertainment, Inc., together with its subsidiaries, operates as a gaming and entertainment resort destination in the United States.
"We rate DOVER DOWNS GAMING & ENTMT (DDE) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins."
You can view the full analysis from the report here: DDE Ratings Report