IGT, CHDN to MGM: Top sports betting stock to watch in Q2

Highlights 

• International Game Technology (NYSE:IGT) has a P/E ratio of 9.64 and a dividend yield of 3.66%. 
• Churchill Downs, Incorporated’s (NASDAQ:CHDN) P/E ratio is 32.05. Its dividend yield is 0.33%, with an annualized dividend of US$0.667. 
• Boyd Gaming Corporation (NYSE:BYD) has a P/E ratio of 13.24. Its dividend yield is 0.49%. 

Sports betting companies are those engaged in providing services and solutions so that people can wager on the outcome, such as horse racing. Most of them own and operate casinos and provide online betting services. The Supreme Court’s revocation of betting activities in 2018 has given the sports gambling business a new lease of life. It led to the proliferation of many sports betting apps., and online sports betting platforms.

Although it is not legal in all the states, at least 34 states and the District of Columbia have legalized sports betting. Around 20 states and D.C. allow online betting, and other states allow only in-person betting at casinos. 

Recently, three online gambling companies, FanDuel Group, DraftKings Inc., and BetMGM, formed a coalition and submitted over 1.6 million signatures in support of an online gambling measure, which has qualified for California’s November ballot.  

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The new measure will appear with the previously qualified ballot measure on legalizing sports betting on horse racing and casinos operating in the Native American land when verified by the state officials, WSJ reported on Wednesday.     

According to the American Gaming Association, the sports betting industry generated roughly US$4.3 billion in revenue last year in the country. 

Here, we discuss five stocks dealing in sports betting:

International Game Technology (NYSE:IGT) 

Closing price on May 3, 2022: US$22.47 

Price range in last 52 weeks: US$32.95 to US$16.26  

International Game Technology PLC is a gaming company based in London, UK. It offers entertainment and responsible gaming experiences for players. Its operating segments are Global Lottery and Global Gaming.  

On April 26, it announced receiving Global Gambling Guidance Group (G4) responsible gaming accreditation for its sports betting operations.  

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For the fiscal year ended December 31, 2021, its revenue increased 31% to US$4.1 billion compared to US$3.12 billion in the previous year. The growth came in double-digit across segments. Its net income was US$670 million compared to the net loss of US$839 million in the prior-year period. 

The company expects its revenue to be between US$4.1 billion and US$4.3 billion for full-year 2022.  

The stock has a market capitalization of US$4.57 billion. Its P/E ratio is 9.64, and the forward P/E for one year is 15.71. The dividend yield is 3.66%, with an annualized dividend of US$0.80.  

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Churchill Downs, Incorporated (NASDAQ:CHDN) 

Closing price on May 3, 2022: US$208.99 

Price range in last 52 weeks: US$262.20 to US$175.01 

Churchill Downs is an online wagering, gaming entertainment, and racing company. Its three operating segments are Live and Historical Racing, TwinSpires, and Gaming. The company is based in Louisville, Kentucky. The company generates revenue primarily from the Gaming segment through casino properties and associated racetracks. 

For the quarter ended March 31, 2022, its revenue was US$364.1 million compared to US$324.3 million in the year-ago quarter. The net income came in at US$42.1 million or US$38.8 per share diluted compared to US$36.1 million or US$39.6 per share diluted in the March quarter of 2021.    

The stock has a market capitalization of US$7.95 billion. Its P/E ratio is 32.05, and the forward P/E for one year is 24.47. The dividend yield is 0.33%, with an annualized dividend of US$0.667.  

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MGM Resorts International (NYSE:MGM) 

Closing price on May 3, 2022: US$40.85 

Price range in last 52 weeks: US$51.17 to US$35.72 

MGM Resorts is a resort operator on the Las Vegas Strip and has 35,000 guest rooms and suites. The Las Vegas, Nevada-based company’s properties include MGM Grand, Mirage, Luxor, Mandalay Bay, and CityCenter.  

For the quarter ended March 31, 2022, its revenue was US$2.85 billion, a 73% increase compared to US$1.65 billion in the same quarter a year ago. Its net loss attributable to MGM Resorts International came in at US$18.01 million or US$0.06 per share diluted compared to the net loss of US$331 million or US$0.69 per share diluted in the March quarter of 2021.  

On May 2, it announced an offer to acquire LeoVegas, an online gaming company, for a total tender value of approximately US$607 million. 

The stock has a market capitalization of US$17.78 billion. Its P/E ratio is 13.26, and the forward P/E for one year is 77.72. Its current dividend yield is 0.02%, with an annualized dividend of US$0.01.  

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Boyd Gaming Corporation (NYSE:BYD) 

Closing price on May 3, 2022: US$61.19 

Price range in last 52 weeks: US$72.72 to US$50.38 

Boyd Gaming Corp is a multi-jurisdictional gaming company headquartered in Las Vegas, Nevada. It operates wholly owned gaming entertainment properties such as casino spaces, table games, slot machines, and hotel rooms. Boyd’s highest revenue comes from its gaming operations.  

For the quarter ended March 31, 2022, it reported a revenue of US$860.7 million, a 14.3% increase YoY compared to US$753.3 million in the same quarter of 2021. Its net income was US$162.9 million or US$1.45 per share compared to US$102.2 million or US$0.90 per share for the March quarter of the previous year.  

The stock has a market capitalization of US$6.73 billion. Its P/E ratio is 13.24, and the forward P/E for one year is 10.95. The dividend yield is 0.49%, with an annualized dividend of US$0.294.  

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Penn National Gaming, Inc. (NASDAQ:PENN) 

Closing price on May 3, 2022: US$38.53 

Price range in last 52 weeks: US$93.02 to US$35.60 

Wyomissing, Pennsylvania-based Penn National Gaming Inc operates gaming and racing properties and video gaming terminal operations in the US. The company operates retail sports betting, online sports betting, online social casino, bingo, and online casinos. It also offers live sports betting in a few states in the US. 

The company will release its FY 2022 first-quarter earnings results on May 5. 

For the fiscal ended December 31, 2021, its revenue was US$5.9 billion compared to US$3.6 billion in the previous fiscal. The net income attributable to the company came in at US$421 million or US$2.48 per share diluted compared to the net loss of US$670 million or US$5.00 per share diluted in fiscal 2020.   

The stock has a market capitalization of US$6.4 billion. Its P/E ratio is 15.41, and the forward P/E for one year is 19.33.  

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Bottom line: 

The performance of the category was below par in the last year compared to the broader market. The Roundhill Sports Betting & iGaming ETF (BETZ) fell around 44% in one year, whereas S&P 500 generated 0.26% return in the same period.