A perfect storm of trends is looming large over regional gaming stocks.
Public companies like Boyd Gaming (BYD), MGM Resorts (MGM) and Penn National Gaming (PENN) are all in the storm’s path according to Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan. In the brief video excerpt above, he lays out our outlook for regional gaming stocks.
- Demographics = Major Headwind – “Casinos are not capturing the younger audience. Baby Boomers are the last of the slot players as Millennials and Generation Xers are unimpressed by current casino offerings.”
- Home Price Growth = Tapped Out? – “What we’ve noticed over the last twenty years or so is that home prices are the number one macro driver of regional gaming revenue. More important than unemployment and more important than GDP. The rate of growth in home prices is stagnating.”
- Hedgeye Model = Bearish – Profitability will be hard to come by if casinos fail to generate anything on the top line.
Bottom Line: The outlook for regional gaming stocks doesn’t look good.