The gaming industry has been through a lot of turmoil in the past two years, mainly in the world's largest gaming market of Macau. Gaming revenue in Macau has dropped by half and as new resorts from Melco Crown (NASDAQ:MPEL), Las Vegas Sands (NYSE:LVS), andWynn Resorts (NASDAQ:WYNN) have been completed, they have spread the revenue that's left among a growing number of resorts. And with MGM Resorts (NYSE:MGM) completing a project next year, the supply problem isn't over yet.
But declines in gaming doesn't mean a decline in profits. In fact, there's some decent value in gaming stocks if you know where to look.
Here's how the big four stack up right now.
Below I've outlined the market cap, net debt, and EBITDA for Las Vegas Sands, MGM Resorts, Wynn Resorts, and Melco Crown. EBITDA is a proxy for cash flow, so it gives us an idea how much money is coming out of the multibillion-dollar casinos these companies have built. On the far right, I've included a valuation metric of enterprise value, or market cap plus net debt, divided by EBITDA.
*DATA SOURCE: YAHOO! FINANCE AND COMPANY EARNINGS RELEASES. MRQ = MOST RECENT QUARTER. TTM = TRAILING 12 MONTHS. NOTE: MGM RESORTS RESULTS ADJUSTED FOR $411 MILLION GAIN ON CRYSTALS SALE.
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