Las Vegas Stocks Low in Gaming Equity Pecking Order Says Analyst
Posted on: June 2, 2025, 06:09h.
Last updated on: June 3, 2025, 09:03h.
- Las Vegas Strip operators are facing revenue challenges, though stocks are seen as value plays
- Analyst sees other gaming sub-groups as preferable to Las Vegas stocks
Amid a three-month streak in which Las Vegas gross gaming revenue (GGR) tracked lower on a year-over-year basis, investors have reasons to be apprehensive about Sin City operators’ stocks.
In a Monday note to clients, Macquarie analyst Chad Beynon said he’s “cautiously optimistic” and gaming equities and fundamentals for the remainder of 2025, but acknowledged much of the case for stocks such as Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM) rests on compelling valuations. Therein lies a potential issue: simply because a stock is inexpensive, that doesn’t mean market participants flock to it.
MGM and Caesars are the two largest operators on the Strip and combine with Wynn Resorts (NASDAQ: WYNN) for 75% of Las Vegas GGR. Of that group, only Wynn, which is the least levered to Las Vegas, is higher on a year-to-date basis while Caesars and MGM are off 21.90% and 10%, respectively. Those performances could be indicative of the markets pricing in disappointing revenue growth.
In Vegas, revenue for combined WYNN/MGM/CZR have been anemic with -5%/+1%/-1%/-7%/-3% growth in the past five quarters (1Q24-1Q25); we expect a 0.4% decline in ’25E for the combined group,” notes Beynon.
Beynon points out that operators’ management teams are acknowledging the declines in gaming revenue, but executives say nongaming revenue sources, including conventions, dining, and shows, remain sturdy.
Vegas Stocks Low on Gaming Equity Totem Pole
Amid the tepid GGR outlook on the Strip, Beynon ranked Las Vegas stocks fourth among the five gaming sub-groups. Shares of operators with Strip exposure placed ahead of Macau concessionaires, of which MGM and Wynn are two, but behind online betting names, gaming suppliers, and regional casino operators.
Beynon mentioned GGR and visitation drops, declining international visitation, and a slow mergers and acquisitions (M&A) environment as among the headwinds weighing on Las Vegas stocks. Through the first five months of 2025, there have been no announced deals of note involving Strip operators despite rampant speculation that some could be poised to sell assets.
Tepid earnings before interest, taxes, depreciation, and amortization (EBITDA) outlooks are also pressuring gaming stocks with the bulk of the most impressive forecasts courtesy of online names and suppliers, not Las Vegas operators.
“Despite the cautiously optimistic outlook, of our 25 covered Gaming companies, only 16% received raised ’25 EBITDA estimates. We believe this is the core reason for the broader underperformance,” adds Beynon.
Off-Strip Las Vegas Stocks Have Been Better
Shares of off-Strip Las Vegas operators have been better this year as highlighted by 2025 gains of 2.50% and 9.04, respectively, for Boyd Gaming (NYSE: BYD) and Red Rock Resorts (NASDAQ: RRR).
Down 12.03% since the start of the year, Strat operator Golden Entertainment is the offender in that cohort, but that company has levers to pull to create shareholder value, including potentially selling some of its real estate or a currently unused Laughlin casino.
All three of those stocks are considered inexpensive and there’s some evidence to suggest Golden has been unduly punished this year, particularly when considering commentary from management indicating that April and May were solid months. Golden executives said the current quarter should be better than the year-earlier equivalent, though they cautioned visibility is limited beyond the next few months.
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