Slowing of Vegas Casino Earnings Decline Enough to Draw Investors
While the latest figures from the Nevada Gaming Control Board on state gambling earnings show a drop this May of over 8 percent compared to last year, the rate of decline was less than experienced throughout 2009 to date, causing casino and gaming stock values to rise. The market reacted to the results, which were significantly better than predicted, by pushing stock prices up across the board. "It's fairly clear there are a lot of investors out there on the edge of their seats, anxious to catch the casino stocks as soon as the anticipated recovery begins," said gaming observer Bob Rodgers. "But there are serious indications they may be buying fool's gold, as gambling issues make take years to reach the levels at which they were overvalued two years ago."
The Las Vegas Strip casinos did particularly well, as the destination resorts fell only 6.4 percent from May of 2008. Joseph Greff of JPMorgan said the Strip performance was its best in almost a year.
Jeffrey Logsdon of BMO Capital told clients that the Strip's results could be considered a moral victory, after losing 15.3 percent in the year to date through the end of April.
Logsdon noted that the industry is entering its traditional slow summer season, and advised caution as well. He did say, "Our channel checks continue to confirm that Memorial Day weekend was full, albeit at promotional room pricing."
