The future of the entertainment casino industry appears bright because of digitalization, technological innovation, and the increasing disposable income of casino-goers. Amid this backdrop, investors could consider buying fundamentally strong entertainment stocks Las Vegas Sands Corp. (LVS), Monarch Casino & Resort, Inc. (MCRI), and International Game Technology PLC (IGT), set to soar in July.
Globally, the excitement over crypto integration, responsible gambling, social networks, live dealer games, AI, and mobile casino options is driving global growth in the casino industry. Notably, Statista predicts the entertainment segment to reach a market volume of $53.13 billion by 2027.
Moreover, the rise of online gambling and sports betting drives platform competition and strengthens the sector's prospects. Also, governments relaxing gambling laws in many countries significantly impact the casino market, aiming to enhance tourism and revenue. As a result, the global casino gaming market is expected to reach $264.10 billion by 2024, growing at a 9.2% CAGR.
Considering these trends, let’s take a look at the fundamentals of the three Entertainment - Casinos/Gambling stocks, starting with the third choice.
Stock #3: Las Vegas Sands Corp. (LVS)
LVS and its subsidiaries develop, own, and operate integrated resorts in Macao and Singapore. They own and operate The Venetian Macao Resort Hotel, the Londoner Macao, The Parisian Macao, The Plaza Macao, and Four Seasons Hotel Macao on the Cotai Strip, as well as the Sands Macao in Macao, China. Additionally, they operate Marina Bay Sands in Singapore.
In terms of the trailing-12-month net income margin, LVS’ 13.99% is 188.2% higher than the 4.85% industry average. Likewise, its 35.10% trailing-12-month EBITDA margin is 208.8% higher than the 11.37% industry average. Additionally, its 28.90% trailing-12-month EBIT margin is 209.7% higher than the 7.72% industry average.
For the first quarter that ended March 31, 2024, LVS’ net revenues increased 39.6% year-over-year to $2.96 billion. Its adjusted net income and adjusted EPS attributable to LVS stood at $566 million and $0.75, up 160.8% and 167.9% over the prior-year quarter, respectively. In addition, its consolidated adjusted property EBITDA grew 52.4% year-over-year to $1.21 billion.
For the quarter ending June 30, 2024, LVS’ EPS and revenue are expected to increase 29.9% and 12.1% year-over-year to $0.60 and $2.85 billion, respectively. It surpassed the consensus revenue estimates in each of the trailing four quarters. Over the past month, the stock has declined marginally to close the last trading session at $44.14.
LVS’ POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Sentiment and Quality. It is ranked #5 out of 25 stocks in the Entertainment - Casinos/Gambling industry. Beyond what we stated above, we also have given LVS grades for Growth, Value, Momentum, and Stability. Get all the LVS ratings here.
Stock #2: Monarch Casino & Resort, Inc. (MCRI)
MCRI and its subsidiaries own and operate the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada. They also own and operate the Monarch Casino Resort Spa Black Hawk in Black Hawk, Colorado.
In terms of the trailing-12-month levered FCF margin, MCRI’s 16.52% is 201.6% higher than the 5.48% industry average. Likewise, the stock’s 32.57% trailing-12-month EBITDA margin is 186.5% higher than the 11.37% industry average. Also, the stock’s 16.40% trailing-12-month net income margin is 237.9% higher than the 4.85% industry average.
MCRI’s net revenues for the first quarter that ended March 31, 2024, increased 4.3% year-over-year to $121.66 million. The company’s net income and EPS increased 3.4% and 3.3% year-over-year to $18.28 million and $0.93, respectively. Also, its adjusted EBITDA rose 5.7% over the previous year's quarter to $38.55 million.
Analysts expect MCRI’s revenue for the quarter ending June 30, 2024, to increase 2.2% to $126.36 million. Its EPS for the quarter ending September 30, 2024, is expected to increase 8.1% year-over-year to $1.33. Over the past nine months, the stock has gained 9% to close the last trading session at $68.11.
MCRI’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B for Stability. It is ranked #4 in the same industry. To see MCRI’s grades for Growth, Value, Momentum, and Sentiment, click here.
Stock #1: International Game Technology PLC (IGT)
Headquartered in London, United Kingdom, IGT operates and provides gaming technology products and services internationally. It operates through three segments: Global Lottery, Global Gaming, and PlayDigital.
On June 25, 2024, IGT announced it won a contract to provide the Ohio Lottery Commission with a video lottery terminal central monitoring system, effective from May 31, 2024, to June 30, 2033. The contract includes an option for Ohio to renew for up to two additional one-year terms.
On May 16, 2024, IGT announced that its PlaySports Trading Advisory Services Team is now supporting sports betting in Michigan through a new agreement with Lac Vieux Desert Northern Waters Casino & Resort. This expands their existing partnership, which has utilized IGT's platform and self-service betting technology since 2021.
In terms of the trailing-12-month EBIT margin, IGT’s 24.75% is 220.8% higher than the 7.72% industry average. Likewise, its 8.61% trailing-12-month Return on Total Capital is 37% higher than the 6.29% industry average. Moreover, its 9.02% trailing-12-month Capex / Sales is 198.5% higher than the 3.02% industry average.
IGT’s total revenue and total operating income for the first quarter ended March 31, 2024, increased marginally year-over-year to $1.07 billion and $256 million, respectively. The company’s adjusted EBITDA, excluding separation and divestiture costs, rose 2.7% from the previous year. Additionally, its adjusted EPS stood at $0.46.
Street expects IGT’s EPS and revenue for the quarter ending June 30, 2024, to increase 8.5% and 0.4% year-over-year to $0.49 and $1.06 billion, respectively. It surpassed the Street EPS and revenue estimates in three of the trailing four quarters, respectively. Over the past month, the stock has gained 2.1% to close the last trading session at $20.08.
It’s no surprise that IGT has an overall rating of B, which translates to a Buy in our proprietary POWR Ratings system.
It is ranked #2 in the Entertainment – Casinos/Gambling industry. It has a B grade for Value, Sentiment, and Quality. Click here to see IGT’s rating for Growth, Momentum, and Stability.
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LVS shares were trading at $44.22 per share on Friday afternoon, up $0.08 (+0.18%). Year-to-date, LVS has declined -9.40%, versus a 15.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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