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.
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.
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.
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.
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.
