ASCA EC: COMPETITION COULD FORCE DOWN SLOT “PRICING”

When analysts examine pricing in the gaming industry the focus is usually on room rates or table game denominations. Often overlooked is slot hold percentage which can be manipulated by casinos. Better quality properties and casinos in less competitive markets typically exhibit higher hold percentages, because they can.
  • Until early August, Ameristar operated the top quality facility in the Northern Indiana and with the exception of Elgin (geographically not a competitor), generated the highest revenues of all the Chicago area properties. East Chicago’s competitive position gave management the luxury of maintaining a slot hold percentage of 9.4%. By comparison, the Chicago market averaged only 8.2% year to date. Even the higher quality facilities downstate, Argosy Lawrenceburg and Pinnacle Belterra, averaged in the low 8s. See the relative hold percentages in the first chart.
  • Harrah’s Entertainment introduced its expanded and renovated facility in early August. Horseshoe Hammond is now clearly the nicest facility in the market and its proximity to East Chicago will provide a serious threat to ASCA. As visitation and volume migrate to Horseshoe, ASCA may be forced to lower its pricing (hold percentage) to protect its market share. The second chart shows the impact on ASCA’s revenue, EBITDA, and EPS assuming a market average hold percentage was in place over the last four quarters. A $0.21 negative impact is clearly meaningful at 15% of TTM EPS.
ASCA EC and Horseshoe benefitting from high slot hold %
"Normalized" slot hold could have material impact

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more