Macquarie Says Regional Casino Stocks Are Reacting Better After Q1 Earnings

Regional casino stocks showed a stronger post-earnings reaction than many larger gaming companies after the first-quarter reporting season, according to Macquarie analyst Chad Beynon.

Macquarie Says Regional Casino Stocks Are Reacting Better After Q1 Earnings

In a new note to clients, Beynon said regional casino operators delivered an average EBITDA beat of around 3% in Q1, compared with roughly 2% for larger peers. The results point to a more stable performance from regional gaming companies, even as investors remain cautious about Las Vegas Strip exposure and broader macroeconomic pressure.

Regional Casino Stocks Track Fundamentals More Closely

Beynon said regional casino stocks largely moved in line with their underlying fundamentals after earnings. He highlighted what he called “EBITDA minus stock moves” as a way to measure whether market reactions matched company performance.

At the regional level, the average residual was close to 0%, suggesting that the group broadly tracked fundamentals. However, some individual companies moved differently from what their earnings results might have suggested.

According to Beynon, Boyd Gaming, Century Casinos, Churchill Downs, and Red Rock Resorts underperformed relative to their fundamentals after reporting earnings. Meanwhile, Full House Resorts and Monarch Casino & Resort saw post-earnings stock reactions that were stronger than their fundamentals implied.

Regional Operators Show Durability

Despite pressure from high gas prices, weaker consumer sentiment, and elevated interest rates, regional casino stocks have shown resilience this year.

That stability may appeal to investors looking for gaming exposure without relying too heavily on Las Vegas Strip trends or the volatility linked to sports betting stocks. Sports betting companies have also faced growing competitive pressure, including from prediction markets.

Beynon said regional gaming trends remained steady, with low-single-digit growth across several markets. Some areas are still dealing with supply pressure, but the broader regional casino segment continues to show a stable fundamental backdrop.

The analyst added that stock moves were only partly explained by estimate revisions, suggesting that investor positioning, Las Vegas exposure, and macro uncertainty are still playing a major role in how gaming stocks trade.

Fuel costs were the obvious test. Regional casinos rely mostly on customers living within about a two-hour drive, unlike fly-in Las Vegas, so a spike at the pump should in theory dent visits. When the conflict involving Iran pushed the US average gas price to $3.91 a gallon in March, up almost a dollar in a month according to AAA, Beynon reported that operators had not seen an impact. In that March note he pointed to regional gross gaming revenue growth of 3.5% year on year in January and signs of another solid month in February.

Penn and Red Rock Receive Positive Ratings

Macquarie remains positive on several regional casino names. Beynon has “outperform” ratings on Penn Entertainment and Red Rock Resorts, indicating that he expects those stocks to perform better than the wider market.

He is more cautious on other regional operators, including Boyd Gaming, Full House Resorts, and Monarch Casino & Resort, which carry “neutral” ratings.

The outlook suggests that Macquarie sees value in parts of the regional casino sector, but not equally across all operators.

Penn is the largest regional casino operator in the US, and Beynon has argued that its new and refreshed properties are starting to pay off; his March note carried a $21 price target on the stock, alongside a $150 target for Churchill Downs, which he also rated "outperform" at the time.

Balance Sheets Put Deals on the Table

Several regional names came out of the quarter with room to grow through acquisitions. Boyd reported $372.7 million in cash on hand alongside its first-quarter results, repurchased $155 million of its own stock during the quarter and had a further $500 million added to its buyback authorisation by the board. It has also been trimming its portfolio, agreeing in February to sell Sam's Town Hotel & Casino in Shreveport, Louisiana, to Bally's.

Monarch, which runs just two casino hotels, the Atlantis in Reno and its namesake resort in Black Hawk, Colorado, has seen its shares rise by nearly 45% over the past year. After a recent meeting with management, Jefferies analyst David Katz concluded that acquisitions were the company's most likely route to its next step up in growth.

Las Vegas Strip Remains Mixed

The outlook for Las Vegas Strip operators appears more complicated. Beynon noted early signs of recovery, especially among higher-end customers and group business. Strong convention and meeting calendars are also helping support Strip performance.

However, the broader demand picture remains uneven. Luxury and premium segments continue to perform well, while core leisure customers are more cautious. In Las Vegas, value-oriented behavior is still visible, suggesting that some visitors are watching spending more closely.

Investors are also monitoring the potential takeover of Caesars Entertainment and the possible impact such a deal could have on MGM Resorts International. Until any transaction is officially announced, Strip-heavy stocks are likely to remain highly sensitive to data, management commentary, and investor sentiment.

The suitor is Golden Nugget owner Tilman Fertitta, whose offer has been reported to value Caesars at around $7 billion. In mid-May, the Financial Times reported that a group of banks was lining up $4 billion to $5 billion of debt to sit alongside $2 billion to $3 billion of equity; Caesars itself carries about $11.9 billion of debt. JPMorgan analyst Daniel Politzer estimated that the market was pricing in roughly a 55% chance of a deal, which he said could take nine to 12 months to clear state regulators and might force sales in markets where Caesars and Golden Nugget overlap. He also argued that one fewer listed Strip operator could leave MGM shares more volatile.

High-End Demand Remains Strong

Beynon said Q1 commentary from casino operators pointed to a divided demand environment. Wealthier customers continue to spend, while mass-market leisure demand is less consistent.

Operators remain optimistic about group and convention demand for the second half of the year and beyond. However, investors are still focused on whether broader consumer demand can accelerate again and whether promotional activity will increase.

Macquarie currently has “outperform” ratings on both Caesars Entertainment and MGM Resorts International.

Regional Casinos May Outperform Strip-Heavy Rivals

Overall, Macquarie’s analysis suggests regional casino stocks may be better positioned than Las Vegas-heavy peers this year.

While Las Vegas continues to benefit from high-end customers and convention traffic, regional operators appear to be offering steadier fundamentals and more predictable earnings trends. That could make them attractive to investors looking for exposure to the gaming sector without taking on too much Strip-related volatility.

If regional gaming trends remain stable, companies with strong local market positions could continue to outperform larger casino operators that depend more heavily on Las Vegas tourism and discretionary spending.