Isle of Capri Casinos Stock Tumbles

While the stock seems likely to rebound, it might hover at the low point for some time.

Investment advisors continue to downgrade casino stocks, and Isle of Capri Casinos, Inc., is the latest to suffer from expectations of declining revenue. Monday, shares of Isle of Capri fell to $8.87, and at times during the session traded as low as $8.64, the lowest price the stock has seen since 2001.

Compounding the general malaise in gambling stocks for the Isle is the defeat of a smoking ban exception in Iowa. Iowa's state House had passed an exemtion from the recently-imposed smoking law for casinos, but the state Senate removed the clause exempting casinos before passing the bill.

Iowa casinos generate roughly 25% of Isle of Capri income, and smoking bans have caused a downturn in revenue. This problem is in addition to the cutbacks in general consumer spending nationwide, which have fewer entertainment dollars being spent at the same time as casino expansion continues unabated.

Industry analyst Ryan Worst of Brean Murray, Carret & Co. lowered his rating of Isle of Capri from "buy" to "hold", and forecast a loss of 94 cents a share, an increased loss from previous expectations of losses of 80 cents per share.

A year ago, Isle of Capri shares were trading as high as $28.24. While the stock seems likely to rebound, it might hover at the low point for some time. The company has attempted to control costs to sustain income levels, but these measures have met with mixed results, causing some employee discontent and sparking debates with horsemen at racinos where racing events have been sharply curtailed.