After WYNN and LVS Earnings, Should You Buy MGM Stock?

It was a big week for the gaming industry, as major casino operators Las Vegas Sands LVS and Wynn Resorts WYNN both reported earnings. These announcements included mixed results for each company, and with MGM Resorts MGM set to report in the coming weeks, investors will want to learn all they can from these reports before making a play on MGM.


Las Vegas Sands posted fourth-quarter earnings of 62 cents per share, which fell short of the Zacks Consensus Estimate by three cents, while Wynn Resorts recorded earnings of 50 cents per share, well below the Zacks Consensus Estimate of 67 cents.

(Also Read: Las Vegas Sands Misses on Q4 Earnings, Stock Down )

However, the real story was in revenues. LVS posted quarterly net revenues of $3.08 billion; this was a 7.4% year-over-year increase but lagged behind our consensus estimate by over 2%. While the opening of the company's new Parisian Macao resort helped LVS record somewhat better performance in the Asian gambling hotspot, market share in the region was disappointing.

On the other hand, Wynn Resorts-despite its earnings miss-pleased investors with better-than-expected revenues. The company's revenues of $1.30 billion surpassed the Zacks Consensus Estimate of $1.25 billion by 4%. Moreover, revenues increased 37.3% on the back of Wynn Palace opening.

(Also Read: Wynn Resorts Stock Up Despite Earnings Miss in Q4 )

The impressive performance of the Wynn Palace was partially offset by a slump at the company's other major Asian property, Wynn Macau, as well as a 2% decline in Las Vegas revenues. Nevertheless, investors clearly favored Wynn's performance in Macao over Las Vegas Sands'.

MGM Earnings Preview

MGM Resorts is expected to report its fourth-quarter earnings results before the market opens on February 16. Our current consensus estimates call for earnings of 14 cents per share and revenues of $2.41 billion, which would represent year-over-year growth of 1,500% and 10%, respectively.

Furthermore, the Most Accurate Estimate currently sits seven cents higher than the Zacks Consensus Estimate; this gives MGM a positive Earnings ESP of 50%, and paired with its Zacks Rank #2 (Buy) ranking, this indicates that a positive surprise is more likely.

The key for MGM will be exactly what impacted Las Vegas Sands and Wynn Resorts: performance in Macao. The fourth quarter was mostly likely a tough period for MGM in Macao, as the openings of its competitors' new properties probably created stiff competition.

MGM has its own new Macao property on the way, and investors should expect the new "MGM Cotai" to boost revenues when its opens in 2Q17. For now, MGM's performance in the region will hopefully be lifted by an overall bump in tourism to the hotspot, and new company initiatives like upgraded main gaming floor products and updated marketing initiatives could pay off big.

While we won't know exactly how MGM performed until its releases its report, the company has seen favorable estimate revision activity and is poised to post solid growth. With the casino industry showing some signs of life, things are shaping up well for MGM investors this quarter.

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Las Vegas Sands Corp. (LVS): Free Stock Analysis Report

Wynn Resorts, Limited (WYNN): Free Stock Analysis Report

MGM Resorts International (MGM): Free Stock Analysis Report

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

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

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