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Recent GDP data suggests that the US economy has already met the traditional definition of a recession: two consecutive quarters of negative growth. But if the recent Global Gaming Expo (G2E) is any accurate indication, the gaming industry hasn’t felt the ill effects yet.
After meeting with industry executives at G2E, Roth Capital analyst Edward Engel noted in a report that casino operators show no signs of worsening gross gaming revenue (GGR). The company that left its mark on the Las Vegas Strip is constructive about the outlook for the next few quarters as a spate of marquee events head to US gaming hubs.
Operators and providers have voiced their opinion from the last few quarters that gambling demand is in line with previous months,” the analyst wrote. “This applies not only to the regional Class II and III markets, but also to the LV Strip.
He said the most noticeable change is how operators allocate capital. After several quarters of increased stock buyback activity, casino companies are now focused on deleveraging due to rising interest rates.
Gaming stocks of all kinds will be challenged this year amid recession fears, persistent inflation and rising interest rates. However, this scenario has some advantages. This includes opportunities for market participants with longer time horizons to gain exposure to some game names that periodically trade at lower valuations.
Fascinating reviews, bullish on Golden Entertainment
Among the casino operators that analysts are bullish on is Golden Entertainment (NASDAQ:GDEN). Arizona Charlie’s operator doesn’t run a strip venue, but its Strat is benefiting from his increased traffic to the strip. Engel said the current quarter could be Strat’s best quarter since the coronavirus pandemic began.