We expect Las Vegas-based fast casino operator,
MGM Resorts International
) to beat expectations when it reports first-quarter 2014 results
on Apr 29, before the opening bell.
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Why a Likely Positive Surprise?
Our proven model shows that MGM Resorts is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, stands at +20.00%.
This is very meaningful and a leading indicator of a likely
positive earnings surprise.
: MGM Resorts has a Zacks Rank #3 (Hold). Note that stocks with
Zacks Ranks #1, 2 and 3 have a significantly higher chance of
beating earnings. The Sell-rated stocks (#4 and 5) should never
be considered going into an earnings announcement.
The combination of MGM Resorts' Zacks Rank #3 and ESP of +20.00%
makes us confident of an earnings beat on Apr 29.
What is Driving the Better-Than-Expected
MGM Resorts has been a consistent growth story in the gaming
sector with its stock climbing 75% over the past one year.
Additionally, the company has delivered positive earnings
surprises in the trailing four quarters, with an average earnings
beat of a stupendous 449.17%.
In fact, MGM Resorts' earnings in the trailing four quarters has
comprehensively beaten the Zacks Consensus Estimate, mainly on
the back of better-than-expected top line. Given the trend over
the past quarters, revenues are expected to improve in the
upcoming quarter as well, driven by the company's Macau
The Macau region has repeatedly delivered double-digit revenue
growth for several months in a row, with gambling revenues
increasing 40% year over year in February and 13% in March. MGM
Resorts derives over one-third of its revenues from Macau and the
region's record growth will boost the company's revenues in the
Despite the optimism surrounding the Macau business, the
company's Las Vegas and CityCentre businesses, which are yet to
fully recover from the economic downturn in the U.S., might prove
to be a drag on the top line. Additionally, we are skeptical
about China's economic slowdown and tighter credit interest rates
may affect overall demand for gaming in the upcoming quarter.
Other Stocks to Consider
MGM Resorts is not the only firm looking up this earnings season.
We also anticipate earnings beat from three other companies in
the broader consumer discretionary industry:
) has an Earnings ESP of +50.00% and a Zacks Rank #3.
Royal Caribbean Cruises Ltd.
) has an Earnings ESP of +1.92% and a Zacks Rank #2 (Buy).
The Walt Disney Company
) has an Earnings ESP of +1.03% and a Zacks Rank #2.