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Factors Setting the Tone for MGM Resorts (MGM) Q2 Earnings

MGM Resorts International MGM is scheduled to report second-quarter 2020 results on Jul 30. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 462.5%.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter bottom line is pegged at a loss of $1.65. Notably, it had reported earnings of 23 cents in the prior-year quarter. Over the past seven days, the company’s earnings estimates have been revised downward by 8 cents. For quarterly revenues, the consensus mark stands at $442.6 million, suggesting a decline of 86.3% from the year-ago reported figure.

Factors to Note

The company’s second-quarter performance is likely to reflect negative impacts of coronavirus-induced shutdowns, dismal visitation and high operating expenses. Although casinos in Macau and domestic markets are now open, the company has been witnessing low visitation.

Moreover, sharp increase in expenses might get reflected in the company’s to-be-reported quarter’s results. During the first-quarter conference call, the company announced that its Macau properties have been incurring cash operating expenses, exclusive of rent, interest, variable gaming taxes, corporate expense and expected capital expenditures, of nearly $1.5 million per day, which is considerably higher than the amount being generated from those properties.

Moreover, results in the quarter to be reported may reflect dismal Casinos, Rooms, Food and beverage, and Entertainment, retail and other revenues. The Zacks Consensus Estimate for revenues at Casinos; Rooms; Food and beverage; and Entertainment, retail and other revenues are pegged at $317 million, $97 million, $79 million and $34.5 million, down 70%, 77.6%, 80.1% and 87.2% year over year, respectively.

MGM Resorts International Price and EPS Surprise MGM Resorts International Price and EPS Surprise

MGM Resorts International price-eps-surprise | MGM Resorts International Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for MGM Resorts this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MGM Resorts has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -10.18%.

Stock With Favorable Combinations

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around.

Electronic Arts Inc. EA has an Earnings ESP of +4.45% and a Zacks Rank #3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wynn Resorts, Limited WYNN has an Earnings ESP of +2.64% and a Zacks Rank of 3.

International Game Technology PLC IGT has an Earnings ESP of +19.07% and a Zacks Rank #2.

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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.

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