Station Casinos Expect to Exceed Projections
9 September 2005
by Rod Smith
Las Vegas Gaming Wire
LAS VEGAS -- Wall Street analysts jumped on the Las Vegas locals
market bandwagon Thursday after Station Casinos announced third-quarter
earnings exceeded earlier projections, thanks to the strength
of the local economy.
In a Securities and Exchange Commission filing,
Station said third-quarter revenue growth at its major Las Vegas
operations should at least hit the top range of the 8 percent
to 11 percent guidance previously provided by the company.
"Bottom line, the quarter is shaping up very
nicely," Station Chief Financial Officer Glenn Christenson
said.
There have been concerns about performance stemming
from gasoline price increases and Hurricane Katrina, but Christenson
said his company's business is still very strong because of the
resilience of the Las Vegas locals market.
While the company did not raise guidance with a
specific projection, Deutsche Bank analyst Marc Falcone said he
now estimates Station's results will exceed the top end, given
continued strength of Station's Jumbo Jackpot marketing program,
the performance of the Las Vegas economy and the locals market
demographics.
As a result of the filing, Bear Stearns analyst
Joe Greff said: "Station, in our view, remains the best growth
story with the most visibility among the gaming operators."
He said the supply-demand dynamics in the locals
market plus a laddering of growth projects that goes through 2010
contribute to the upward revisions in estimates of Station's performance.
Station also released new estimates placing the
value of its nonrevenue producing land as high as $1.3 billion.
"Our land holdings are a key component of our
stock values. As we've accumulated more property over time, we
felt a need to inform investors about the value placed on that
property," Christenson said.
The initial acquisition cost of 489 acres in land-banked
property in Nevada was placed at $188 million.
Station also owns 67 acres of land at Wild Wild
West, which cost $149.6 million and 40 acres of excess land associated
with its current hotel-casino operations.
In addition, Station has advanced approximately
$149 million toward the development of future tribal gaming projects,
which it believes will be repaid from either the financing or
the operation of these projects.
CB Richard Ellis provided new estimates for the
land in Nevada and Robert Charles Lesser & Co. provided estimates
for the land in California.
Investors previously were left to depend on acquisition
costs to evaluate the value of the company.
Analysts said the announcements bode well for Boyd
Gaming Corp. as well.
"We believe that Boyd should also benefit from
this continued Las Vegas locals growth, so we're currently projecting
9 percent (third-quarter) revenue growth for its Boulder Strip
and Coast properties," Falcone said.
Wall Street previously had estimated Boyd Gaming's
third-quarter revenue growth at 7 percent.
Station Casinos shares closed Thursday at $69.88,
up 0.49 percent or 34 cents on 600,000 shares trading, slightly
above normal trading volume.
Boyd Gaming closed at $48.08, down 0.23 percent
or 11 cents on 637,000 shares trading, just below normal trading
volume.
