Circus, Starwood lead decline in gaming stocks

Gary Thompson

Tuesday, Oct. 6, 1998 | 11:29 a.m.

The rout in gaming stocks accelerated Monday, led by the plunging prices of Circus Circus Enterprises Inc. and Starwood Hotels & Resorts Inc. shares.

Circus was the biggest percentage loser, plummeting 18.4 percent to close at $8.31, down $1.88. That represents a loss of $180 million in equity value in just one day. The stock has fallen from a 52-week high of $26.50.

But Starwood's 15.5 percent plunge Monday translated into an $815 million paper loss for its shareholders, far exceeding the Circus number. Caesars Palace owner Starwood closed at $23.50 Monday, down $4.31. It has traded as high as $61.50 in the past year, but has lost $7.19 billion of market value since then.

Mirage Resorts Inc. was the lone bright spot among casino operators, notching a 25-cent a share gain to $15.25 as anticipation builds over the Oct. 15 opening of its new $1.8 billion Las Vegas resort, Bellagio.

For most other gaming stocks, though, Monday was the latest in a long line of dismal days, with several companies hitting new 52-week lows.

Boyd Gaming Corp. plunged 13 percent to $2.94, Grand Casinos Inc. fell 9 percent to $6.94, Hilton Hotels Corp. dropped 6.6 percent to $14.94, and Rio Hotel & Casino Inc. was down 6 percent to $11.81.

Primadonna Resorts Inc., Harrah's Entertainment Inc., Anchor Gaming, Station Casinos, MGM Grand Inc. and International Game Technology also fell sharply.

Gaming stocks that hit 52-week lows included Acres Gaming, American Wagering, Aztar Corp., Boyd Gaming, Circus Circus, Grand Casinos, Harrah's, Hilton, IGT, Rio, Starwood and Station Casinos.

The GAX, an index of 14 gaming stocks that excludes Starwood, Hilton, Anchor and Boyd Gaming, fell 4.6 percent, closing at 135.19. The index has fallen 47.6 percent from its 52-week high.

By contrast, the broad-based S&P 500 index is off 17 percent for the period, the 30 Dow Jones Industrial blue-chip stocks are down 17.5 percent and the Nasdaq Composite Index has lost 24.2 percent.

The impact of global economic problems on the United States, fears of reduced leisure spending and concerns about overcapacity in the Las Vegas gaming market have caused a massive selloff of casino-stocks.

Companies such as Starwood and Hilton, which also have large hotel holdings, have been hurt by concerns about increased competition in the mid- and upper-ends of the lodging business.