On Apr 10, 2014, we issued an updated research report on
MGM Resorts International
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On Feb 19, this leading casino resort company reported solid
fourth quarter results with earnings and revenue beating the
Zacks Consensus Estimate. Adjusted earnings of 11 cents per share
for the fourth quarter compared favorably with the prior-year
quarter loss of 23 cents per share. The results were driven by
higher revenues and increased adjusted earnings before interests,
taxes, depreciation and amortization.
Total revenue increased 10% year over year, thanks to improving
Las Vegas business. Though Casino revenues at wholly-owned
domestic resorts declined 2%, MGM China's net revenue was up
27.0% year over year due to increases in main floor table games
and VIP revenues.
The company's properties are well diversified in the U.S., which
protects it from regional downturns. Driven by its efforts to
expand in the lucrative domestic market, the company is expected
to witness increased occupancy and better pricing. Going forward,
limited supply, a moderate increase in visits in the Las Vegas
market and improving trends at its urban complex - CityCenter
should bode well for domestic growth. MGM Resorts expects its Las
Vegas business to grow further in 2014, gaining from solid
convention bookings and completion of several capital initiatives
on the Las Vegas Strip. We believe the company stands to gain
market share with economic recovery.
Besides the domestic market, the company is progressing well
overseas too. MGM derives a solid share of its revenues from
Macau, the largest gaming destination in the world. Despite
concerns over sustained economic growth in China, the company
expects the Macau market to continue to grow as a result of a
large and growing Asian middle class population and
infrastructure improvements, which are expected to facilitate
more convenient travel to and within Macau.
The company also expects a positive trend in Macau buoyed by a
gradual recovery in VIP gaming, upgrades to main gaming floor
products, marketing initiatives as well as substantial growth in
Macau mass market gaming revenues. MGM Resorts plans to double
its presence in Macau with the launch of MGM Cotai project in
2016 in Cotai Strip, Macau. On the international front, Japan and
South Korea have also caught the attention of the company. Driven
by solid results and a strong outlook for 2014, estimates for
2014 and 2015 largely moved upward over the last 60 days for this
Zacks Rank #2 (Buy) company.
Other Stocks to Consider
Investors interested in the gaming industry may consider stocks
Caesars Acquisition Company
Wynn Resorts Ltd.
Las Vegas Sands Corp.
). While Caesars Acquisition and Wynn Resorts sport a Zacks Rank
#1 (Strong Buy), Las Vegas Sands carry a Zacks Rank #2.