Carnival forecasted 2013 to be weak based on a slow recovery from its disaster. In 2013, the company has observed an increasing booking pattern post the commencement of the WAVE season and the demand trends have been strong. In the last few weeks, booking volumes have been operating at about 20% higher as compared to the previous year, due in part to the slower booking trends the company experienced after the Costa Concordia grounding in January of 2012.
Valuation Considerations
None of these firms is a screaming buy:
| MPEL | Melco Crown Entertainment | 27.47 | 2.79 | 3.5 | NA | 0.72 |
| LVS | Las Vegas Sands | 29.54 | 4.04 | 4.95 | NA | NA |
| MGM | MGM Resorts | NA | 0.72 | 1.19 | 10.33 | 2.49 |
| WYNN | Wynn Resorts | 26.3 | 2.48 | 30.71 | NA | NA |
| PENN | Penn National Gaming | 26.01 | 1.38 | 1.82 | NA | NA |
| CCL | Carnival | 23.36 | 1.97 | 1.27 | NA | 0.37 |
| RCL | Royal Caribbean | 17.71 | 1.03 | 0.91 | 10.99 | 0.89 |
Only Royal Caribbean is interesting based on these financial metrics. It is trading at a discount to book value and at a low price-to-sales multiple. Its price-to-earnings multiple is on the pricey side, though.
Other stocks in this industry are impossible to bet on. Only MGM Resorts International (NYSE:MGM) is cheap based on price multiples, but it has a high debt-to-equity ratio.
Conclusion
Wait for lower valuations before jumping into resort and casino stocks. If you can’t resist the industry, consider Royal Caribbean as a buy candidate.
The article Are These Resort & Casino Stocks Too Much Of A Gamble? originally appeared on Fool.com and is written by Bill Edson.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
