Why Gaming Stocks Are Falling in 2014

Gaming stocks have been on a tear since 2009, driven by a nearly tenfold gain for Las Vegas Sands (NYSE: LVS  )  and a nearly ninefold gain for Melco Crown (NASDAQ: MPEL  ) . But this year, both stocks are down and slower-growing rivals Wynn Resorts (NASDAQ: WYNN  ) and MGM Resorts (NYSE: MGM  ) are leading the market. 

The explanation has little to do with operational problems at any of these companies and everything to do with the industry as a whole, and their valuations coming into the year. Growth has slowed in Macau and, with stocks highly valued coming into the year, it has put pressure on gaming stocks. 

Gaming specialist Travis Hoium covers why big gaming stocks are down this year, and what investors should do now. 

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  • Report this Comment On July 15, 2014, at 8:14 PM, matixtrade wrote:

    I would like to point out a few things. First MGM has $12.9B debt, $1.2B cash, $9.7B with no eps and no divi. MPEL has $3.1B debt, $2.5B cash, $5.3B revs a 1.49 eps and a 1.5% divi, MPEL has the strongest growth guidance estimates in 2015 with $6.9B revs ( +25% ) and 2.02 eps ( +22% ), A few other notes LVS $10,3B debt, $3.3B cash with a +10% growth estimates 2015, WYNN $7.3B debt, $3.5B cash and high single digit 2015 growth estimates. MPEL and LVS a 16 forward p/e, WYNN a forward 21 p/e and MGM a forward 38 p/e. Also a few facts MPEL will be opening Manila COD 2014, Studio City Macau 2015 and expanding Macau COD Tower 5 2016. The 2 new Casinos are a partnership with a cost of around $1.75B. Meanwhile the bigger is better strategy of WYNN Cotai at $4B - $5B remains to be scene? All 4 will be vying for the Japanese market and MPEL's Lawrence Ho has been an active Diplomat visiting the country and leaders for the past few years, MPEL 1st started partnering with one of Australia's richest in James Packer and now with the richest man in the Philippines Henry Sy. To think he will not again partner with the Japanese elite is out of the question. I have been a shareholder of MPEL buying in the low single digits. This is an Emerging Asian Gaming Franchise. My professional career having spent 30 years in the U.S. Gaming Industry. My investment choice is unequivocally #1 MPEL #2 LVS #3 WYNN #4 MGM.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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8/28/2015 4:00 PM
LVS $47.36 Up +0.10 +0.21%
Las Vegas Sands Co… CAPS Rating: ****
MGM $20.84 Up +0.30 +1.46%
MGM Resorts Intern… CAPS Rating: ***
MPEL $18.22 Down -0.21 -1.14%
Melco Crown Entert… CAPS Rating: ****
WYNN $78.20 Down -0.32 -0.41%
Wynn Resorts, Limi… CAPS Rating: ***