Gaming stocks relatively flat in July

Summer doldrums found its way into the gaming sector.

The average daily stock prices of nine casino operators and slot machine makers charted by Las Vegas-based financial consultant Applied Analysis showed minimal fluctuation during July, as opposed to previous months when the sector experienced double-digit changes.

“The net impact of the up and down activity over the past two months resulted in aggregate valuations looking fairly consistent month-to-month,” Applied Analysis partner Brian Gordon wrote in a monthly report to investors Friday.

The relatively quiet month led the Applied Analysis Gaming Index to a nearly six point increase.

Analysts said gaming stocks may see more movement in August as the news of second-quarter earnings begins to settle. On Thursday, Las Vegas Sands Corp. (LVS) reported a net loss of $222.2 million while Wynn Resorts (WYNN) said net earnings fell 91 percent compared to the same quarter a year ago.

MGM Mirage (MGM) reports second-quarter results on Monday. However, investors are looking toward future indicators that might show the gaming industry is headed toward a recovery after last year’s economic meltdown.

“While fundamentals in the national economy remain weak, several prognosticators have suggested the pace of the decline is decelerating and that an end to the current downturn may be in sight,” Gordon said.

Janney Montgomery Scott gaming analyst Brian McGill, in a research note following Las Vegas Sands’ earnings, said investors are focused on cost-cutting programs and ways for casino companies to raise liquidity. Both Las Vegas Sands and Wynn are exploring initial public offerings on the Hong Kong Stock Exchange by selling shares in their Macau casino operations.

Susquehanna gaming analyst Robert LaFleur said investors are still cautious when it concerns Las Vegas, especially how the Strip may react following the planned December unveiling of the $8.5 billion CityCenter development.

“As is the case with all Las Vegas operators, the opening of CityCenter later this year is a challenge that may forestall any recovery in the market,” LaFleur told investors.

The only casino operator with any significant decline during July was Pinnacle Entertainment, which saw its average daily stock price slip almost 11 percent compared with June.

One area of the sector that saw a notable jump during July concerned slot machine manufacturers.

News of slot machine expansion plans in Ohio and Illinois and the potential for growth in other markets gave investors some indication that slot machine sales might be on the increase.

While the average daily stock price for market giant International Game Technology showed a modest increase, shares of WMS Industries were up more than 8 percent while shares of Bally Technologies (BYI) rose almost 15 percent.

Gordon said IGT’s (IGT) “stronger than expected” earnings report in July triggered some movement in the sector.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.