Business

Las Vegas casino stock considered a good bet to weather the recession

Macquarie Research thinks Las Vegas casinos are in a better position to handle the economic downturn than in the past due to a leaner cost structure and tight market supply.

Analyst Chad Beynon and team also indicates that demand for business and conference travel is strongly pent-up, which is supposed to help counterbalance softer leisure consumers. Vegas searches are also noted to show continued growth.

“Despite concerns around peak demand in Las Vegas, our monthly survey highlights continued access demand into the fall. Overall searches were +3% month-over-month in July, after 6%/5% in May/June, with search volume continuing to grow in August/September Time period February-June visits decreased by 10% less than ’19 levels’.”

Macquarie’s view of the casino sector is that while total gaming revenue and margins will attract attention, the recent earnings round has shown how non-gaming revenue can drive EBITDA is higher for the group with MGM Resorts (NYSE:MGM), Caesars Entertainment (CZR), and Wynn Resorts (WYNN) all report Vegas occupancy rates above 90%.

Las Vegas revenue mix: MGM Resorts (MGM) had the highest grossing in Las Vegas at 47%, followed by Caesars Entertainment (CZR) at 45%, Vici Properties VICI) at 30%, Golden Entertainment (GDEN) at 25% and Wynn Resorts at 23%. Boyd Gaming (BYD) and Red Rock Resort (RRR) also has indirect exposure to Strip spills.

See which casino stocks have Search for the highest Alpha Volume Rating.

Compare valuation and profitability metrics on MGM, CZR and WYNN.

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