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MGM Resorts (MGM) Up 2.6% Since Earnings Report: Can It Continue?

It has been about a month since the last earnings report for MGM ResortsInternationalMGM . Shares have added about 2.6% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

MGM Resorts Q1 Earnings & Revenues Top Estimates

MGM Resorts reported better-than-expected first-quarter 2017 results with both earnings and revenues surpassing the Zacks Consensus Estimate.

Earnings and Revenue Discussion

MGM Resorts posted adjusted earnings of $0.38 per share which surpassed the Zacks Consensus Estimate of $0.26 by 46.2%. Moreover, earnings were significantly above the year-ago quarter figure on account of higher revenues.

Total revenue of $2.71 billion beat the Zacks Consensus Estimate of $2.61 billion by nearly 4% and jumped 22.6% year over year. The upside reflects a significant increase in revenues from the company's Las Vegas operations and MGM China as well.

Adjusted property EBITDA (earnings before interest, taxes, and amortization) at MGM Resorts' wholly owned domestic resorts was $648 million, up 34% year over year. The Profit Growth Plan that commenced in Jul 2015 continues to pay off, which is reflected through improving profits.

MGM China

Notably, the company owns approximately 56% of MGM China Holdings Limited, the owner of MGM Macau resort and casino, and is developing a gaming resort in Cotai.

MGM China's net revenue rose 7% year over year to $502 million due to higher revenues from main-floor table games, somewhat offset by decrease in revenues from VIP gamblers.

Main-floor table games revenues increased 17% on the back of hold percentage increase of 420 basis points (bps) year over year to 22.2%.

Meanwhile, VIP table games revenues witnessed a decline of 5% as turnover plunged 16% in the quarter. However, hold percentage increased 40 basis points (bps) year over year to 3.4%.

MGM China's adjusted EBITDA increased 25% to $143 million.

Domestic Operations

MGM Resorts owns and operates several properties in Las Vegas. Apart from this, it also owns a number of assets in Mississippi and Michigan.

Net revenue of $2.1 billion at the company's domestic resorts increased 29% over the prior-year quarter. This rise in revenues marks an increase of 6% on a same-store basis, excluding contributions from Borgata Hotel Casino and Spa and MGM National Harbor.

Moreover, casino revenues from wholly owned domestic resorts surged a significant 50% due to the acquisition of Borgata, opening of MGM National Harbor and increasing revenues in both table games and slots.

Room revenues also increased 15%, primarily attributable to around 9% rise each in Las Vegas Strip RevPAR (Revenue per Available Room) and average daily rate. Notably, occupancy remained flat.

While operating income at the company's wholly owned domestic resorts increased 30.7% to $477 million, adjusted EBITDA increased 34% to $648 million.

Income from Unconsolidated Affiliates - CityCenter Holdings

MGM's urban complex, CityCenter (located in Las Vegas, with 50% owned by the company) operates through two segments, Resort and Residential. Under the Resort operations, the company has three properties, namely, Aria, Vdara and Mandarin Oriental.

Net revenue from CityCenter rose 8% year over year to nearly $326 million on the back of increase in casino, rooms, and food and beverage revenues, partly offset by a decline in entertainment revenues due to the Apr 2016 Zarkana show closure.

Adjusted EBITDA was also up 22% to $112 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

MGM Resorts International Price and Consensus

MGM Resorts International Price and Consensus | MGM Resorts International Quote

VGM Scores

At this time, MGM Resorts' stock has a nice Growth Score of 'B', though it is lagging on the momentum front with a 'D'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score o f'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.

Outlook

The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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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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