As Melco Resorts is the most leveraged to the gaming activity in Macau in this group of stocks, it is the most vulnerable company to the downturn in the area due to the outbreak of coronavirus. If the company were to reinstate its dividend at the same level, shares would yield nearly 6% at the current stock price. Overall, we expect 2% average annual growth in earnings per share over the next five years. As Melco Resorts is the most leveraged to the gaming activity in Macau in this group of stocks, it is the most vulnerable company to the downturn in the area due to the outbreak of coronavirus. Based on this, the stock has a price-to-earnings ratio of 16.6, which is lower than our fair value estimate of around 17.0. Gaming activity in Macau enjoyed a strong recovery from 2017-2019. The industry that deals in casinos is called the gaming industry. However, we believe that the coronavirus crisis will not last beyond this year and we view the long-term growth prospects of the company as intact. It is worth noting that the gaming activity in the area was facing another headwind, protests from civilians, before the outbreak of coronavirus. On the other hand, beyond this year, Las Vegas Sands has promising growth prospects ahead. The relatively attractive economics of casinos make the industry worthy of a closer look. Overall, we expect negative total returns in the mid-single-digits over the next five years. In late July, MGM Resorts reported (7/30/20) financial results for the second quarter of fiscal 2020. As soon as the effect of coronavirus begins to fade, the company has promising growth prospects ahead.
Additionally, we prefer Las Vegan Sands for its stronger balance sheet, which is paramount during severe downturns. We view the stock as fairly valued. This project will significantly increase the traffic to the casinos in Macau.
It will benefit from the ramp-up of activity in its Morpheus Resort, which opened in mid-2018, and attract an increasing number of visitors in Cotai thanks to improvements in mass transportation. All these initiatives are likely to be significant growth drivers as soon as Macau returns to normal. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Finally, a contracting valuation multiple could be an additional headwind for shareholders. Moreover, the company has been caught off guard, with total current and long-term debt outstanding of $12.78 billion and cash and cash equivalents of $3.80 billion. Site (and App) Updates from the Last Few Months, A new trading strategy from a future star trader, This Is One Of The Greatest Secular Growth Trends, Free Group Coaching and Mentoring at Traders Summit. Therefore, we see Las Vegas Sands stock as the only undervalued casino stock. Logically, this is a net positive for casino stocks to buy. To provide a perspective for the severity of the downturn, all the U.S. casino companies asked Congress for emergency financial help, as several industries have been impacted by coronavirus. The stock jumped 12% on the announcement. Thanks to all these growth drivers and given the suppressed earnings expected this year, we expect the company to grow its earnings per share by about 4% per year over the next five years.
Due to the outbreak of coronavirus, Las Vegas Sands is facing strong headwinds in Macau and in the U.S. As mentioned above, gaming activity has collapsed in Macau. The company is expected to post a significant loss for 2020. Given its healthy balance sheet, the company is likely to resume paying dividends once the coronavirus crisis ends. The stock is markedly volatile due to its high debt load, which is an added risk factor.
Not only do we see potential for strong earnings growth along with a high dividend yield for this stock, Las Vegas Sands also earns the top ranking because of its strong balance sheet and healthy liquidity. Updated on September 14th, 2020 by Bob Ciura. Since Wynn Resorts is highly leveraged to the gaming activity in Macau, it saw its earnings collapse and it cut its dividend by 62% in 2015-2016 due to the Macau downturn that was caused by the anti-corruption regulatory crackdown in the area. The company also closed its casino in Maryland.
On the other hand, due to its extreme leverage to gaming activity in Macau, the stock is highly vulnerable to any negative development related to coronavirus. Melco Resorts seems the least attractive choice whereas Las Vegas Sands has by far the most attractive risk/reward profile. Due to the headwind from coronavirus, we expect MGM Resorts to report a net loss in 2020.
The company launched Four Seasons Tower Suites Macao last year and it expects to perform its grand opening this year while it also expects to launch the Londoner Macao within 2020-2021 and expand Marina Bay Sands in Singapore. They are an elite group of 65 stocks in the S&P 500 Index with 25+ years of rising dividends.
Legislative Opportunities ETF, Guggenheim S&P Midcap 400 Pure Growth ETF, First Trust Large Cap US Equity Select ETF, SPDR Select Sector Fund - Consumer Discretionary, Even More (Almost) Real-Time Stock Alerts. MGM Resorts owns and operates casinos, hotels and conference halls in the U.S. and China. The company began reopening its U.S.properties in the quarter but its revenue plunged -91% over last year’s quarter due to the suspension of the operations of the company in the U.S. and a collapse in gaming revenues in Macau caused by travel restrictions and social distancing.
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