3 Gaming Stocks to Watch Despite Industry Challenges – Yahoo Finance

The Zacks Gaming industry is gradually recovering from the coronavirus pandemic. Although the industry is benefiting from improving visitation in Las Vegas, dismal visitation in Macau is hurting it. The Macau recovery remains slow and it is still unclear when the market will return to its pre-pandemic level. However, robust demand for sports betting is aiding the industry. Stocks like MGM Resorts International MGM, Wynn Resorts, Limited WYNN and Boyd Gaming Corporation BYD are likely to gain traction from this upbeat demand.
Industry Description
The Zacks Gaming industry includes companies, which primarily own and operate integrated casinos, hotels and entertainment resorts. Some industry players also deliver technology products and services across lotteries, electronic gaming machines, sports betting and interactive gaming. Some industry participants further develop and operate gaming establishments as well as associated lodging, restaurant, horse racing and entertainment amenities. Some companies are also involved in developing and selling gaming applications. Additionally, e-sport or sporting event or tournament services, content management system, video software, mobile applications and e-sports data platform solutions are provided.
Key Themes Shaping the Gaming Industry
Visitation Still Below Pre-Pandemic Level: Traffic persists as a major concern for the gaming industry since the coronavirus pandemic. However, the industry is gradually coming out of the woods despite a dismal performance in Macau still hurting the industry. Easing of local COVID-related restrictions helped gross gaming revenue (GGR) to rebound in August to $271 million compared with $49 million recorded in July. However, the figure was well below the August 2019 figure of $3 billion and also down 50.7% year over year. For the first eight months of 2022, Macau’s GGR declined 53.4% year over year and 85.4% compared with the same period in 2019. In 2021, Macau casinos’ performance was better than the 2020 reading but still well below the pre-pandemic level. In 2021, Macau’s gross gaming revenue (GGR) totaled $10.82 billion, up nearly 44% year over year. However, the 2021 annual figure was still 70% below the pre-pandemic tally. Notably, companies continue to focus on the level of services and staffing with selective amenities, and enhanced safety and social-distancing protocols in the gaming floor to welcome gamers.

U.S. Commercial Gaming Revenues Make Record: The gaming industry in the United States is recovering faster than anticipated. Per the American Gaming Association data, revenues from gambling hit a record high of $53 billion in 2021. Gambling was already flourishing in the United States until the pandemic had struck in early 2020. Previously, in 2019, revenues from gambling hit a record high of $43.65 billion. In July 2022, U.S commercial gaming revenues came in at $5.06 billion, up 2.8% year over year. Gaming revenues surpassed the $5-billion mark four times in the last five months. Through July, commercial gaming revenues touched $34.27 billion, up 15.5% year over year. The U.S. gaming industry will continue to improve.  

Sports Betting a Major Driver: The legalization of sports betting in Delaware, Mississippi, New Jersey, New Mexico, West Virginia, Pennsylvania, Rhode Island, Montana, Indiana, Tennessee, Illinois and New Hampshire has been driving growth for a while. Moreover, bettors can now place wagers via the digital platforms in Connecticut, Kentucky, Michigan, Massachusetts, Maryland, Minnesota, Missouri, Kansas, Louisiana, Oklahoma, South Carolina, California, Oregon, Arizona, Montana, Colorado and other states. Some popular gaming applications include DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch.
Zacks Industry Rank Indicates Cloudy Prospects
The Zacks Gaming industry is grouped within the broader Zacks Consumer Discretionary sector.  It carries a Zacks Industry Rank #166, which places it in the bottom 34% of more than 251 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since Mar 31, 2022, the industry’s southbound estimate for the current year has widened 145%.
Despite the industry’s drab near-term prospects, we will present a few gaming stocks that one can add to the investment portfolio, given their strong fundamentals. But it’s worth looking at the industry’s shareholder returns and its current valuation first.
Industry Underperforms Sector and the S&P 500
The Zacks Gaming industry has lagged the S&P 500 Index and the broader Zacks Consumer Discretionary sector over the past year.
The industry has plunged 42.3% over this period compared with the S&P 500 Index’s decline of 11.7% and the sector’s decrease of 37.6%.
Gaming Industry’s Valuation
Since gaming companies are debt-laden, valuing the same based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio makes sense. The industry currently has a forward 12-month EV/EBITDA ratio of 13.65. The space is trading at a discount compared to the market at large, as the forward 12-month EV/EBITDA ratio for the S&P 500 is 19.92.
Over the past five years, the industry has traded as high as 16.75X and as low as 6.89X, with a median of 10.91X, as the chart below shows.
3 Zacks Gaming Stocks to Watch for
MGM Resorts: Based in Las Vegas, NV, MGM Resorts is a holding company, and primarily owns and operates casino resorts through wholly-owned subsidiaries. MGM is benefiting from pent-up consumer demand, high domestic casino spending and robust demand for sports betting. Also, it is benefiting from increased visitation in the Las Vegas market. Sports betting and iGaming continues to be a major driver for MGM.
Shares of this presently Zacks Rank #3 (Hold) player have declined 17.7% in the past six months. Moreover, MGM’s 2022 earnings and sales are anticipated to increase 106% and 30% each, from the respective year-ago reported figures. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wynn Resorts: Based in Las Vegas, NV, Wynn Resorts and subsidiaries are a leading developer, owner and operator of casino resorts. WYNN is benefiting from improved non-gaming revenues and expansion in the domestic markets. Also, focus on WynnBET bodes well. Going forward, WYNN anticipates solid revenue generation on the back of new product features and a unique marketing campaign.
Shares of this currently Zacks #3 Ranked player have declined 15.2% in the past six months. Moreover, WYNN’s 2022 earnings and sales are anticipated to increase 39.5% and 2.1% year over year, respectively.
Boyd Gaming: Founded in 1975 and headquartered in Las Vegas, NV, BYD is benefiting from initiatives to strengthen its current operations, and growth through capital investment and other strategic measures. The expansion of online betting offerings and the FanDuel partnership bodes well. Boyd Gaming is a multi-jurisdictional gaming company.
Shares of this presently Zacks Rank #3 player have declined 24.4% in the past six months. BYD’s 2022 earnings and sales are anticipated to increase 7.4% and 3.2% each from the respective year-ago reported numbers.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MGM Resorts International (MGM) : Free Stock Analysis Report
Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Related Quotes
Have an issue with your financial adviser or looking for a new one? Email questions and concerns to picks@marketwatch.com.
Leaving these accounts open could tarnish your golden years.
A strong jobs report these days runs counter to the Fed’s wishes. The line of thought is that if the job market is still too hot, the Fed won’t be keen on loosening its tight monetary policy in the ongoing efforts to tame inflation. And this is a scenario the market is keen to avoid after a series of 75 basis-point hikes this year. But J.P. Morgan Asset Management chief strategist David Kelly thinks the latest numbers flatter to deceive and believes the way the data is reported distorts the real
Nio (NYSE: NIO) stock spiked Monday morning, but it didn't take long for it to reverse course. The volatility shows just how dynamic the economic situation is in China. Shares of the Chinese EV maker jumped nearly 7% after the market opened, but by 12:40 p.m. ET, Nio stock was down by 1.6%.
As competition escalates for new savings customers, many financial institutions are promising high yields simply for becoming a customer and following various transaction requirements. Shopping around for a checking or savings account means finding a bank that fits with your financial lifestyle in terms of digital and mobile capabilities, as well as branch and ATM access, says McBride. “Avoid checking accounts that have balance requirements and monthly fees so you don’t unnecessarily strand money in a low-yielding account just to avoid fees,” adding that there are plenty of non-interest options out there that have no fees.
Top-line data from a phase IIb/III study shows that Anave's (AVXL) lead drug exhibited statistical and clinical improvement in cognition and function in patients with early Alzheimer's disease.
Shares of enterprise software giants Snowflake (NYSE: SNOW), Datadog (NASDAQ: DDOG), and MongoDB (NASDAQ: MDB) were plunging on Monday, down by 8.7%, 6.4%, and 9.4%, respectively, as of 3:06 p.m. ET. There wasn't much company-specific news today, although Snowflake reported earnings last week, and MongoDB will report tomorrow. Friday's strong jobs and wages report, combined with today's stronger-than-expected services Purchasing Managers' Index (PMI) reading, showed the economy may be stronger than generally thought — surprising, especially since recent financial results and guidance in the software industry have been less than stellar.
A helicopter with important ties to Wichita has won a contract from the U.S. Army that could lead to more than 2,000 aircraft. The Army late Monday afternoon selected the V-280 Valor from the Bell unit of Textron Inc. as the winner of its Future Long Range Assault Aircraft program. The contract win will likely be challenged by the opposing team of Lockheed Martin Corp.’s (NYSE: LMT) and the Boeing Co. (NYSE: BA).
A roundup of recent banking and finance news across Greater Philadelphia: A coalition of 13 Republican state attorneys general wants to stop Vanguard Group from buying shares in U.S. utilities companies due to the investment manager’s environmental, social and governance policies. The attorneys general filed a motion last week to the Federal Energy Regulatory Commission requesting it block Vanguard’s purchase.
For Tesla (TSLA) in China, there's a bit of good news and some potential bad news.
Yahoo Finance Live looks at cannabis-tied shares following President Biden's signing of a marijuana research bill.
Globally, total private- and public-sector debt as a share of GDP rose from 200% in 1999 to 350% in 2021, the economist Nouriel Roubini says.
In this article, we will discuss the 12 best undervalued energy stocks to buy. If you want to explore similar stocks, you can also take a look at 5 Best Undervalued Energy Stocks to Buy. 2022 has been the year for energy stocks. While all sectors of the economy fluctuated, the energy sector remained relatively […]
With a yield of 9.62%, the recently expired Series I bond was understandably popular. With interest rates rising, bond funds are down this year and banks continue to offer miserly rates on deposit accounts. So it's no wonder that a … Continue reading → The post It Pays to Procrastinate: The New 6.89% I bonds Will Beat the Old 9.62% Bonds in Just 4 Years appeared first on SmartAsset Blog.
New year, new Social Security rules.
Many people wonder whether they should be investing in qualified or non-qualified dividends and what the differences are. The largest difference is in how each is taxed. To help you determine what stock paying dividends could have a place in … Continue reading → The post Qualified vs. Non-Qualified Dividends appeared first on SmartAsset Blog.
Even Warren Buffett has plenty of fingers in the pie.
Shares of telecom giant Lumen Technologies (NYSE: LUMN) plunged 25.7% in November, according to data from S&P Global Market Intelligence. It wasn't difficult to ascertain why Lumen fell last month: The company announced on its Nov. 2 earnings call that it suspended its generous dividend. In the third quarter, Lumen once again disappointed the markets, with revenue declining 10.2% and non-generally accepted accounting principles (adjusted) earnings per share of $0.14 missing estimates by a wide $0.21.
GitLab Inc. (GTLB) delivered earnings and revenue surprises of 37.50% and 6.86%, respectively, for the quarter ended October 2022. Do the numbers hold clues to what lies ahead for the stock?
The founder of the bankrupt cryptocurrency exchange launched a media blitzkrieg to give his version of his downfall.


Leave a Comment