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What Mixed Earnings Say About Casino ETF?

Casino stocks have been suffering the curse of choppy Macau business for quite a long time now. Though the other key region for casino business – Las Vegas – has been on a recovery mode, full-fledged improvement is yet to be seen. Notably, Macau – a Chinese territory – is one of the largest casino gaming destinations in the world. Credit crunch issues in mainland China, check on illegal money transfers especially in VIP gaming, and a broad-based slowdown in China led casino operations to doze off. Though this long-criticized zone recorded a 9.5% decline in gambling revenue in April, the fall was less than expected. This definitely sparks off hopes over positive developments in the region. Investors should note that April numbers revealed the 23rd successive monthly drop in revenues. Against this background, casino stocks reported earnings in the last few days. Investors might be interested in knowing how badly casino earnings were hurt due to the sagging Macau business or how smartly these companies navigated the troubles, and definitely their impact on the casino ETF. Q1 Earnings in Detail MGM Resorts International (NYSE: MGM ) posted first-quarter 2016 earnings of $0.16 per share on May 5. Earnings surpassed the Zacks Consensus Estimate of $0.13, but were lower than the year-ago earnings of $0.26. Revenues were down 5.2% to $2.21 billion and fell short of the Zacks Consensus Estimate of $2.31 billion. The downside reflects a significant decline in revenues from MGM China. VIP gambling continues to be a drag in China. However, net revenue at wholly-owned domestic resorts was up 2.6%. MGM shares gained about 1.9% on May 5. In late April, Las Vegas Sands Corp. (NYSE: LVS ) came up with first-quarter 2016 earnings per share of $0.45 that missed the Zacks Consensus Estimate of $0.61. Adjusted EPS declined almost 32% year over year due to lower revenues and profits. Quarterly net revenue of $2.72 billion missed the Zacks Consensus Estimate of $2.88 billion and declined 9.8% year over year due to weak performance in Macau. LVS stock was down about 14.8% (as of May 5, 2016) since it reported earnings on April 20. Wynn Resorts Ltd. (NASDAQ: WYNN ) posted mixed first-quarter 2016 results. Adjusted earnings of $1.07 per share were 52.9% higher year over year and beat the Zacks Consensus Estimate of $0.83. Revenues of $997.7 million missed the consensus mark of $1.007 billion and slipped 8.7% year over year, owing to a 13.8% decline in Macau, partially made up by 0.7% rise in revenues in Las Vegas. WYNN resorts gained about 2% after hours of May 5, after reporting earnings. ETF Impact The impact of mixed earnings should be felt in the casino gaming ETF Market Vectors Gaming ETF (NYSEARCA: BJK ) as the trio has found a place in the top 10 holdings of the fund with a considerable share. Investors should note that the Zacks Industry Rank of the above-mentioned stocks is in the top 42%, at the time of writing. While WYNN has a Zacks Rank #2 (Buy), LVS and MGM has a Zacks Rank #3 (Hold) each. But BJK has a Zacks ETF Rank #1 (Strong Buy), though with a High risk outlook. For investors seeking to keep a watch on this ETF in the coming days, we have taken a closer look at the details of this fund: BJK in Focus The fund looks to track the Market Vectors Global Gaming Index and provides investors a direct exposure to the casino gaming market. The fund has so far attracted $17.8 million in assets with 44 holdings. The product is expensive as it charges 66 bps in fees per year. Both companies – Sands China ( OTCPK:SCHYY ) and Las Vegas Sands – have about 15% exposure in BJK. MGM Resorts International and MGM China ( OTCPK:MCHVY ) – together take about 7.6% of the fund. Wynn Resorts and Wynn Macau ( OTCPK:WYNMY ), together take about 4.2% of the fund. Original Post Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Time To Buy Casino ETF On Value?

The dark clouds of slowdown that were long settled over Macau are finally clearing. Casino operators, who have been suffering from a sluggish business scene in Macau, are again seeing glimmers of hope. Notably, Macau – a Chinese territory – is one of the largest casino gaming destinations in the world. Credit crunch in Mainland China, check on illegal money transfers especially in VIP gaming, constraints on visa and last but not the least, a broad-based slowdown in China wrecked havoc on the casino business in Macau. However, these burning issues have started to cool off. Gaming revenues declined 21.4% year over year in January, but the fall was lesser than what analysts had projected. Year-over-year declines in Macau gaming revenues may decrease further in February to 5%, as per Credit Suisse Group AG. In the last one month, the casino gaming ETF Market Vectors Gaming ETF (NYSEARCA: BJK ) was up 3.3% (as of February 12, 2016). All in all, there was a boost in sentiments in gambling companies. This makes it more important to look at casino earnings this season. Below, we highlight two key casino earnings releases: Q4 at Wynn Resorts On February 11, Wynn Resorts Ltd. (NASDAQ: WYNN ) posted mixed fourth-quarter 2015 results. Adjusted earnings of $1.03 per share decreased 14.2% but beat the Zacks Consensus Estimate of $0.74 by 39.2%. Revenues of $946.9 million missed the consensus mark of $1960 million by 1.4% and slipped 17% year over year, owing to a choppy performance in Macau. Despite the mixed performance, investors were keen on building positions in the stock as founder Steve Wynn pointed out that this January as ‘the best month in a long time’. Investors took this statement as a sign of turnaround in Macau operations, which have long been a pain for Wynn. The company surged more than 15.8% on February 12, 2016 following the earnings report. Notably, Wynn Macau revenues plummeted 27% year over year to $555.7 million in the quarter, owing to lower revenues at the VIP and the mass market segments, while Wynn Resorts’ revenues from Las Vegas operations increased 3.8% year over year to $391.2 million supported by higher non-casino revenues. WYNN has a Zacks Rank #3 with a value style score of ‘B’. The underlying industry of the company is in top 25% segment of the Zacks Universe. Q4 at Las Vegas Sands Las Vegas Sands’ (NYSE: LVS ) fourth-quarter 2015 earnings of $0.62 – announced on Jan. 27 – missed the Zacks Consensus Estimate of $0.64 by 3.1%. Earnings fell approximately 32.6% year over year. The downside reflects a decline in revenues, partially offset by lower expenses. Quarterly net revenue of $2.86 billion missed the Zacks Consensus Estimate of $2.92 billion by 2.1% and declined 16.2% year over year due to soft business in Macau. Since reporting earnings, the stock gained about 6% (as of February 12, 2016). LVS has a Zacks Rank #3 with a value style score of ‘B’. Casino ETF: Time to Buy? The performance at Wynn Resorts has acted as a cornerstone for the entire space as LVS also added over 9% and MGM Resorts International (NYSE: MGM ) advanced about 7% at the close on February 12, 2016. WYNN’s outsized gains gave a big push to the casino gaming ETF which was up 3.4% on February 12, but is down 0.7% since Las Vegas Sands reported its earnings. Moreover, investors should note that casino stocks have been extremely cheap in valuation after undergoing a steep sell-off. Plus, analysts are betting on a turnaround in Macau. Per analysts , the region is changing itself from being mass-centric to being VIP-oriented. Another group of analysts believes that “if the yuan and Chinese economy stabilize there’s money making opportunity in Macau.” In any case, all three companies mentioned above have found a place in the fund with a considerable share. Las Vegas Sands and Sands China – together have about 16% exposure in BJK. Wynn Resorts takes about 3.21% in the fund while MGM has about 6.2% share. The fund holds about 43 stocks in total. The product charges 66 bps in fees and has a Zacks ETF Rank #3. Original Post

Should You Bet On Casino ETFs After Mixed Earnings?

The overall casino industry is caught in a spiralling slowdown for quite some time now. While Las Vegas was a drag earlier and Macau was an outperformer, the backdrop took a turn in the last few quarters, making Macau a culprit. Notably, Macau – a Chinese territory – is one of the largest casino gaming destinations in the world. Credit crunch issues in mainland China, check on illegal money transfers especially in VIP gaming, constraints on visa and last but not the least, a broad-based slowdown in China were responsible for this drop-off (read: Will Troubles in Macau Spoil Gaming ETF Investments? ). Though the situation has improved, as evident from mixed Q3 earnings from casino bellwethers, there is still room for improvement. Despite the ‘golden week’, gross gaming revenues in Macau plummeted 28.4% year over year to $2.51 billion in October. In China, the golden week is a seven-day long holiday period starting from October 1, when people party and splurge. However, the current decline, which marks the seventeenth successive monthly and fourteenth consecutive double-digit decline, was what analysts had expected. The outright negative mood has weighed on the casino gaming ETF Market Vectors Gaming ETF (NYSEARCA: BJK ), which is down 11.5% so far this year (as of November 4, 2015). However, mixed earnings gave a considerable push to the fund in the last one month, when it added about 5.7%. Given this, investors might be interested in the casino earnings details and the potential impact on the casino ETF ahead. Q3 Earnings in Detail MGM Resorts International (NYSE: MGM ) posted third-quarter 2015 earnings of 15 cents per share on October 27. Earnings surpassed the Zacks Consensus Estimate of 3 cents and reversed the year-ago loss of 2 cents. Revenues were down 8.2% to $2.28 billon and fell short of the Zacks Consensus Estimate by 0.6%. The downside reflects a significant decline in revenues from MGM China. VIP gambling continues to be a drag in China. However, net revenue at wholly owned domestic resorts was up 3.7%. Casino revenues from wholly owned domestic resorts went up 4%. Along with this, MGM Resorts announced a plan to create a controlled real estate investment trust (REIT) that will be named MGM Growth Properties LLC. The transaction is expected to be completed in the first quarter of 2016. Thanks to the earnings beat plus restructuring effort, MGM shares gained about 10.3% in the last five trading sessions (as of November 4, 2015). On October 21, Las Vegas Sands Corp. (NYSE: LVS ) fell shy of the Zacks Consensus Estimate on revenues but surpassed the same on earnings. Cost containment aided earnings. Also, the company declared a 10.8% increase in dividend for 2016. Earnings of 66 cents per share fell 21% year over year hurt by an 18% decline in revenues. Earnings beat our estimate by 4.8% while revenues of $2.89 billion fell short of the Zacks Consensus Estimate of $2.97 billion. Gross gaming revenues in Macau declined in double digits in all three months of the quarter. LVS stock was up about 6.1% since it reported earnings (as of November 4, 2015). On October 15, Wynn Resorts Ltd. (NASDAQ: WYNN ) posted mixed third-quarter 2015 results. Adjusted earnings of 86 cents dropped 56% and missed the Zacks Consensus Estimate by 14.7%. Revenues of $996.3 million missed the consensus mark of $1.03 billion by 3.4% and slipped 27% year over year, owing to a choppy performance both Macau and Las Vegas. WYNN resorts lost 1.2% since reporting earnings (as of November 4, 2015) (see all the Consumer Discretionary ETFs here ). Casino ETF: Buy on the Value? Investors should note that casino stocks are extremely cheap in valuation after undergoing a steep sell-off. The fund is presently trading at $34.04 per share which is 24.6% down from its 52-week high. Moreover, though Macau revenues are still lackluster, in-line data and signs of stability in companies’ earnings point to a revival, albeit slow. Notably, all three companies mentioned above have found a place in the top 10 holdings of this $27.6 million fund with a considerable share. Las Vegas Sands and Sands China together have about 14% exposure in BJK. MGM Resorts International has 4% weight in the fund while Wynn Resorts Ltd accounts for more than 6% of BJK. The product charges 65 bps in fees. The fund lost over 20% in the last one year (as of November 4, 2015). Link to the original post on Zacks.com