MGM Resorts Beats on Both Earnings & Revs - Analyst Blog


MGM Resorts International 's ( MGM ) third-quarter 2013 adjusted earnings of 2 cents per share comprehensively beat the Zacks Consensus Estimate of a loss of 3 cents as well as the prior-year quarter loss of 23 cents per share. The better-than-expected bottom-line performance can be attributed to an improved top line.

However, on a reported basis, MGM Resorts posted a loss of 7 cents per share compared with a net loss of 37 cents per share in the prior-year quarter.

In the third quarter, total revenue increased 9% year over year to $2.46 billon, which also beat the Zacks Consensus Estimate of $2.41 billion. Higher revenues in both Las Vegas and China boosted the top line. Visitation in the Las Vegas market remains strong ensuring a speedy recovery from the damage due to recession.

Domestic Operations

The company owns and operates several properties, spread across Nevada, Mississippi and Michigan. Casino revenues related to wholly-owned domestic resorts grew 3%. The overall table games percentage at casinos of wholly-owned domestic resorts was 21.5%, higher than the year-ago level of 20.4%. Revenues from Table games increased 10% in the quarter. Slot revenues nudged up 1% mainly driven by continued impressive performances (up 3%) at Las Vegas Strip resorts.

Room revenues increased 5.0%, primarily attributable to a 3.0% rise in RevPAR (revenue per available room) at Las Vegas Strip properties. A higher average daily rate as well as occupancy led to the rise in RevPAR at these resorts.

Similar to the prior three quarters, MGM's urban complex CityCenter continued to perform well in the third quarter including residential operations.  Net revenue from CityCenter grew 10.5% year over year to $294.3 million due to better results from the residential division.

Net revenue from resort operations grew just 2% to $268.0 million mainly due to lower revenues from the Aria property. Aria's table games hold percentage was 22.5% in the quarter versus 29.3% in the prior-year quarter. However, Crystals, Vdara and Mandarin Oriental put up a decent show.

Adjusted EBITDA from CityCenter improved to $61.3 million from $52.8 million recorded in the prior-year quarter. Adjusted EBITDA of the company's wholly-owned domestic resorts was $350.1 million, up 7.8% year over year.

MGM China

MGM China's net revenue was up 22% to $808.0 million due to increases in main floor table games, and VIP revenues. Main floor table games and slot wins went up 31% and 4%, respectively. VIP table games turnover increased significantly by 28%.

Adjusted EBITDA grew 25% to $191.0 million due to higher contribution from the main floor business, which represents around 50% of EBITDA.

Our Take

This casino-resort operator maintained the momentum it had set at the start of the year. The first-quarter of this year marked MGM Resorts' return to profitability and we believe that strong revenue generation in both Las Vegas and China in the third quarter will help it to sustain the turnaround. However, in Las Vegas, performance of Aria has been a deterrent for the past two quarters. Also, a higher debt load in its balance sheet acts as a concern.

MGM Resorts currently retains a Zacks Rank #2 (Buy). Other companies in the casino industry, which are expected to perform well, include Century Casinos Inc. ( CNTY ), Churchill Downs Inc. ( CHDN ) and Melco Crown Entertainment Limited ( MPEL ) all carrying a Zacks Rank #2.

CHURCHILL DOWNS (CHDN): Free Stock Analysis Report

CENTURY CASINOS (CNTY): Free Stock Analysis Report

MGM RESORTS INT (MGM): Free Stock Analysis Report

MELCO CROWN ENT (MPEL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CHDN , CNTY , MGM , MPEL

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