Billionaire Ken Griffin’s Citadel Reports 4.8% Stake In Pinnacle Entertainment, Inc (PNK)

Larger players in the casino industry include Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts, Limited (NASDAQ:WYNN). These two stocks carry trailing earnings multiples in the 24-25 range, which as we’ve mentioned is similar to Pinnacle’s valuation based on analyst consensus for this year. Wynn, similarly to Pinnacle, recorded an increase in revenue in its most recent quarter compared to the same period in the previous year but this was offset by higher costs leading to a small decline in earnings (profits are up year to date, however, due to a good Q1). It should also be noted that Wynn pays shareholders a dividend yield of slightly more than 3% at current prices. Las Vegas Sands has been aggressively expanding into Macau with new casinos over the last few years, and this has helped fuel double-digit revenue growth rates and large percentage increases in profits. Surely some of these increases will be short lived but it may be worth looking into how much future growth might be expected for investors who are comfortable with or even want the Chinese exposure.

Weighing Pinnacle against other casinos is a question of geography- whether Macau or non-Vegas American locations are more desirable for future earnings- and a question of how much the company can improve in the future. Current financial performance has been weak enough that we would prefer to wait for better results from the company before considering it at the current valuation.

Disclosure: I own no shares of any stocks mentioned in this article.