Is Monthly Gaming Win Data Still A Viable Trading Opportunity?
Most investors have to wait three months for quarterly updates about how business is going for the stocks they own. However, investors of casino companies such as Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL), Wynn Resorts, Limited (NASDAQ: WYNN), Las Vegas Sands Corp. (NYSE: LVS), MGM Resorts International (NYSE: MGM) and Caesars Entertainment Corp (NASDAQ: CZR) get access to a monthly bellwether for the casino business in Macau, China and Las Vegas, Nevada.
The Nevada Gaming Control Board and the Macao Gaming and Coordination Bureau provide monthly gaming revenue reports for the two largest gaming hubs in the world. These numbers provide insight into how revenue for these companies may be trending ahead of quarterly earnings reports.
Benzinga looked back to see whether or not these reports provide trading opportunities for investors.
Closest Pure Play
Melco Crown is the closest thing on the U.S. markets to a Macau pure-play. In the past 10 months, Macau has delivered eight monthly revenue beats compared to low market consensus forecasts. On the day following these monthly reports, Melco Crown stock has averaged a 3.3 percent daily gain. However, on the day following the two revenue misses, the stock has averaged a 1 percent decline.
Overall, Melco averaged a 3.3 percent move on the day after the monthly revenue release. That level of volatility is an indication that the market is certainly watching revenue numbers closely.
The most recent monthly Macau report is a prime example. Following a big October revenue beat, Melco Crown jumped 8 percent. The rest of the Macau casino stocks traded up in-line with their relative exposure to the Macau market. Wynn surged 3.8 percent, Las Vegas Sands climbed 1.3 percent and MGM rose 0.8 percent. Caesars Entertainment, which has no Macau exposure, traded flat on the day.
MGM generates nearly 80 percent of its revenue from the U.S., the majority of which comes from the Las Vegas Strip. In the past six months, the Las Vegas Strip has delivered positive year-over-year revenue growth three times and negative growth three times. MGM stock is averaging a 0.4 percent loss following positive growth reports and a 0.9 percent loss following negative growth reports.
Clearly, casino stocks react to monthly revenue updates from Macau and Las Vegas. However, investors should understand exactly how much exposure each of their stocks has to both markets in order to understand how much the monthly reports could move the stocks.
Disclosure: the author is long MPEL.
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