Gambling companies are starting to make a comeback. Las Vegas saw increases in gambling revenue this quarter and analysts expect international revenue to grow in 2013. So, on which gambling company should you place your bet?
Turning around
Las Vegas Sands Corp. (NYSE:LVS) has had a rough patch for a while and is trying to recover from its many losses in the past. The company has seen a decline in earnings per share for the last three quarters. Moreover, analysts expect a tepid first-quarter report from the company.
However, there is some good news in analysts’ expectations. The general consensus is that the company will see a 27% increase in earnings for the full year. A lot of this has to do with a region known as Macau.
Sands China has had a decline in earnings as well, but recently began to grow again – largely due to the booming market in Macau. The company is expected to grow 58% this year. It is launching a new casino called The Parisian Macao, which will open in 2015. This $2.7 billion project should help the company carry on its growth.
The majority of Las Vegas Sands Corp. (NYSE:LVS)’ revenue comes from SANDS CHINA LTD. (HKG:1928). Only 14% of its revenue is from its operation in Las Vegas. The boost in revenue in Macau is a great sign for Las Vegas Sands. Gambling is up 2.3% in Las Vegas Sands Corp. (NYSE:LVS) so far this year, which is another great sign. This is the highest growth in five years.
Another rebounding casino
Wynn Resorts, Limited (NASDAQ:WYNN) receives the majority of its revenue from its solitary Macau resort. In 2012, it received 71.15% of its $5.1 billion revenue from Macau. Total revenue for the company as a whole was down in 2012, but is growing again in 2013.
In the month of February alone, the Las Vegas Sands Corp. (NYSE:LVS) Strip’s gambling revenue was up 31.2%. Reports suggest that this may have to do with an influx of travelers and gambling for the Chinese New Year. This increase in revenue on the Strip affects all casinos – including Wynn Resorts and Las Vegas Sands.
Wall Street analysts expect earnings to grow 12.5% this year because of the growth in Las Vegas Sands Corp. (NYSE:LVS) gambling and increased spending in Macau.
Will online gambling work?
International and domestic gambling has been helping the two casino companies grow their bottom line. Zynga Inc (NASDAQ:ZNGA) has officially entered the gambling industry in the United Kingdom with its two new games – RealPokerPlus and RealCasinoPlus.
The company suffered and earnings declined last year. In 2012, the company grew revenue 12% to $1.28 billion. However, its losses were $209 million. A positive for Zynga Inc (NASDAQ:ZNGA) was an increase in its advertising revenue to $137 million.
Zynga Inc (NASDAQ:ZNGA) makes money in two ways. The first is by charging game users for aspects of playing its games. One of its most popular games, FarmVille, charges users for upgrades and additional features. For any game that is played via Facebook Inc (NASDAQ:FB), Zynga has to pay a portion of its revenue to Facebook Inc (NASDAQ:FB) in fees. It has roughly 2.9 million paying users.
The other way Zynga Inc (NASDAQ:ZNGA) monetizes its users is by selling advertisement in its games. This has grown drastically, while paying users have slipped 2%.
The entrance to online gambling is a positive sign for the company as it attempts to find new revenue streams. It will be sharing a portion of its revenue with the U.K. gaming site bwin. There are only three states in the United States that allow online gambling. Unless more states adopt online gambling, this move won’t mean much for Zynga Inc (NASDAQ:ZNGA).
Final thoughts
If you are going to do any betting, bet on a good gambling stock. Gambling companies are starting to see some recovery as consumer spending rises. Las Vegas may see a comeback, but Macau is bringing in the profits for sure. Zynga Inc (NASDAQ:ZNGA) is trying to diversify its business and find new ways to delight its investors. Unfortunately, this is not the best way to go. Online gambling won’t expand far enough to turn a huge profit. Stick with Las Vegas Sands and Wynn Resorts as your gambling stocks.
The article Are These Companies Worth Gambling Upon? originally appeared on Fool.com.
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