Wynn, Caesars Report Latest Brutal Casino Earnings

The global pandemic has been devastating to casino stocks in 2020, and two top Las Vegas operators have reported some disappointing third-quarter earnings numbers as investors continue to hope the casino recovery will start picking up steam heading into 2021.

Caesars Turnaround Story: On Thursday, Caesars Entertainment Inc CZR reported a third-quarter EPS loss of $6.09, far worse than the $2.03 loss analysts were expecting. Caesars also reported $1.37 billion in revenue, missing consensus analyst estimates by $360 million. Caesars’ revenue was up 106.6% compared to a year ago following the acquisition of Eldorado Resorts earlier this year.

Bank of America analyst Shaun Kelley said the Caesars turnaround story is still in the early innings.

“As a whole, CZR remains confident in its ability to drive meaningful margin expansion across the proforma structure, and reiterated its 35-40% margin target, while the deal with WMH will provide CZR with more exposure to the Sports/iGaming themes,” Kelley wrote in a note.

Bank of America has a Neutral rating and $65 price target for Caesars.

Related Link: Las Vegas Sands Looks To Sell Vegas Casinos For $6B, But Analyst Isn't Optimistic

Wynn’s Encouraging Outlook: Also on Thursday, Wynn Resorts, Limited WYNN reported an adjusted third-quarter EPS loss of $7.04, well short of the $3.89 loss analysts were expecting. Third-quarter revenue of $370.4 million also missed analyst estimates by $64 million. Revenue was down 77.5% from a year ago.

Despite the lackluster top- and bottom-line numbers, Kelley said Wynn’s operating results in Las Vegas, Boston and Macau were encouraging.

“Bottom line, Wynn is back to EBITDA positive across all of its geographies, which reduces cash burn and raises optionality,” Kelley said.

Bank of America has a Buy rating and $95 price target for Wynn.

Benzinga’s Take: The good news for investors is that gross gaming revenue in both Macau and Las Vegas clearly seems to have bottomed barring another round of casino shutdowns. The million-dollar question for casino investors is when, if ever, will the industry fully recover to pre-pandemic levels.