01 November, 2007

Las Vegas Sands posts loss as Gamblers Win and Sink the Casino Growth Sector

The Casino growth story popped severely today. The two poster child's for Macau gambling growth were sold off in bunches. Las Vegas Sands (LVS) posted a LOSS! That's right a LOSS even though its been growing its operations tremendously worldwide. Now some costs of opening new resorts factored into the loss but the bottom line was that the House was beaten this quarter. Gamblers seemed to have their day, not only at the expense of the casinos but their stockholders as well. After hours results from LVS caused shares to drop 15% after an almost 6% decline during the regular trading session. Fellow casino growth brother in arms Wynn Resorts (WYNN) posted a 4% decline in the regular session and was off 8% in after hours trading.

My take on the casino players has always been, through two major articles now, that MGM Mirage (MGM) has the potential to be the most steady and risk averse of the big 3.
From establishing highs recently the high flying momentum casino stocks WYNN and LVS have now accumulated losses of 20% and 30% respectively. Both stocks have more than doubled in the span of the last year so Investors surely must still be satisfied. Now MGM, which also more than double over the past year has only fallen 12% from its high of $100/share. On a foreword P/E basis it is also still the cheapest of the 3 casino players.

Thus MGM is still my Lion in this space and I will be buying if I see the low 80s. I do however think both WYNN and LVS are becoming a lot more attractive on a valuation and potential growth basis after this latest round of quarterly earnings fumbles, but the plan that MGM has is still unfolding in Macau and worldwide and that's the one I want to own.

Disclosure: Author currently holds no position in any of the companies mentioned

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