EARNINGS PREVIEW: US Casinos Find Big Money Still In Macau

TAKING THE PULSE: Rising visitor numbers, fatter margins and a series of mostly positive decisions from government regulators are expected to boost big casino operators' earnings this quarter, adding momentum to the year's rebound. Those companies with operations in Asia are seen performing especially well as Chinese regulators ease some restrictions on visitors to Macau.

Higher revenue from U.S. resorts and casinos depends on a shaky economic recovery, however, which could spell trouble for some operators. Susquehanna says Las Vegas' recovery has slowed dramatically as its busiest convention season ends and the city becomes more dependent on the leisure market, making holdings outside the gambling hub all the more important to companies' results.

 
   COMPANIES TO WATCH: 
 
   Wynn Resorts Ltd. (WYNN) - July 18 

Wall Street Expectations: Analysts expect earnings of 99 cents a share on $1.26 billion in revenue. A year earlier, the company earned 42 cents a share, or 52 cents excluding write-downs, on revenue of $1.03 billion.

Key Issues: Despite fierce competition, Wynn continues to cash in on its booming business in Macau, the Chinese gambling Mecca that reported a 52% jump in June gambling revenue compared with a year ago. Fitch Ratings last week upgraded the luxury casino resort operator, citing the Chinese special administrative region as a key strength. In Las Vegas, Wynn's casino also seems to be pulling ahead of its major competitors as convention visitors return in larger numbers.

 
   Penn National Gaming Inc. (PENN) - July 21 

Wall Street Expectations: Analysts polled by Thomson Reuters expect a per-share profit of 47 cents with $687 million in revenue. A year earlier, the company reported a per-share profit of 9 cents, or 29 cents excluding items such as asset write-downs, on $598.3 million in revenue.

Key Issues: The operator of casinos and horse racetracks in the eastern U.S. has seen its revenue improve lately as consumer spending stabilizes. The company reached an agreement to end litigation with state authorities in Ohio over one of two planned casinos there, while analysts have praised a joint venture with auto racetrack operator International Speedway Corp. (ISCA, ISCB) in Kansas City. Moody's Investors Service last month raised its credit outlook for the company to positive, saying it expects Penn will continue to perform well relative to its competitors.

 
   Las Vegas Sands Corp. (LVS) - Expected July 28 

Wall Street Expectations: The consensus calls for 44 cents a share in earnings and $2.21 billion in revenue. Including the impact from preferred dividends, Sands posted a penny-per-share loss a year ago--a profit of 17 cents excluding preopening costs and other impacts--with revenue minus certain promotional allowances at $1.59 billion.

Key Issues: Despite its name, the company already generates most of its revenue in Asia. Sterne Agee says the chain's new casino in Macau's highly desirable Cotai area "should instantly leverage the largest existing mass gaming database in Macau" and turn day-trippers to overnighters with affordable hotel rooms, which are in short supply there. Results have also benefited from improving performance at Las Vegas Sands' Marina Bay Sands resort.

 
   Boyd Gaming Corp. (BYD) - Expected Aug. 1 

Wall Street Expectations: The Street sees a per-share profit of 2 cents and $579 million in revenue. A year earlier, the company earned 4 cents a share, or 5 cents excluding items, on $578.5 million in revenue.

Key Issues: Boyd has struggled amid an uneven economic recovery in the U.S. as revenue remains soft in Las Vegas. One of Sin City's oldest gambling companies, the geographically diverse casino operator has benefited in recent quarters from its half stake in the Borgata in Atlantic City, N.J. A $288 million deal for a Mississippi resort and spa is expected to further bolster the company's top line in the long run, but it could add to its already burdensome costs in its fiscal second quarter.

 
   MGM Resorts International (MGM) - Expected Aug. 3 

Wall Street Expectations: Analysts polled by Thomson Reuters expect a loss of 13 cents a share on $1.59 billion in revenue. The company posted a year-earlier loss of $2 a share--35 cents excluding write-downs--and $1.54 billion in revenue.

Key Issues: Earnings will benefit from a recently launched joint venture in Macau with Pansy Ho, the daughter of local gambling tycoon Stanley, after an agreement reached earlier this year. Morgan Stanley also sees the company benefiting from improving leisure trends at its properties in Las Vegas, but it will take time for adjusted earnings to return to peak levels.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; [e-mail]