Casino stocks Wynn Resorts (WYNN), Melco Resorts & Entertainment (MLCO) and Las Vegas Sands (LVS) climbed Tuesday as they got a boost from analyst-beating Macau gaming revenue last month.
XBut MGM Resorts International (MGM), which is more Las Vegas-centric, suffered from weak April revenue and visitation in the U.S. gambling mecca.
Results posted Tuesday showed sales in Macau, which is China's only legal casino hub, shoot up 27.6% to 25.73 billion patacas ($3.18 billion), crushing views of 18%-22% growth. The world's largest gambling area is the top revenue driver for Wynn Resorts, Melco Resorts & Entertainment and Las Vegas Sands.
The former Portuguese colony's gaming results show continued momentum, however revenues have yet to return to the highs of 2014. They have now risen for the 21st month in a row since plunging during a crackdown on corruption in 2014.
Wynn Resorts
The S&P 500 stock is one of the main winners from increasing Macau revenues, as it holds the Wynn Palace and Wynn Macau casino resorts in the region. It closed up 3% at 191.83 on the stock market today, though it was in average volume. Wynn Resorts stock formed an 11-week cup-with-handle base and is nearing a correct entry point of 192.85, MarketSmith analysis shows. It has made gains in the last three trading sessions.
Wynn has slipped from its leading position to third in the Leisure-Gaming/Equipment Group and has an IBD Composite Rating of 94.
Its Macau revenues helped the company romp home with a double beat when it announced Q1 earnings last month. It posted revenue of $1.72 billion, up 20.5%, while earnings per share came in at $2.30. During the fourth quarter, Wynn's earnings nearly tripled on gaming results from Macau.
In the company's earnings release, the firm said it expected its long-awaited Wynn Boston Harbor property to open in the middle of next year.
Wynn Resorts has cited its "dependence on Stephen A. Wynn" as a risk to its business. The company founder resigned from his position as CEO amid allegations of sexual misconduct in February.
Melco Resorts & Entertainment
The stock, whose China properties include City of Dreams Macau, Studio City and Altira Macau, rose 3.3% to 32.25. The firm draws much of its sales from its Chinese locations, and is owned by Hong Kong-based Melco International Development.
The stock remains in buy range after a nine-week consolidation, with a correct entry of 30.59. Its Composite Rating has increased to 86, however it still lags Wynn Resorts. But its Relative Strength Rating is a strong 92, while its RS line is at its highest level in more than three years.
Las Vegas Sands
The Sands Macao and The Plaza Macao operator rallied 2.1% to 74.86. The stock has been building a flat base for the past 14 weeks, and despite the boost is still a long way from its buy point of 79.94. However, it is gaining strength, with its relative strength line at its highest level for around three years.
The stock boasts an impressive IBD Composite Rating of 98, its upgrade last week moving it into joint first place with Churchill Downs (CHDN).
The moved came after the company posted 58% earnings growth for Q1. That means it's now posted two straight quarters of rising EPS growth. Sales growth rose 17%, up from 12% in the prior quarter. That marks two quarters of increasing revenue gains.
MGM Resorts International
The good news from Macau was not enough to lift MGM, which dipped 0.1% to 31.40.
Last week, the stock plummeted through both its 50- and 200-day lines after reporting that net revenue from its U.S. resorts, mainly located in Las Vegas, fell 1% in the same quarter last year. This was despite the firm beating on both revenue and earnings.
Even without this, the stock looks dicey, with an IBD Composite Rating of just 35 and a dire RS rating of 27.
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The post This Casino Stock Rallies Near Buy Point As Macau Gaming Booms appeared first on Investor's Business Daily.
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