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MGM Resorts International Message Board

  • investora2z investora2z Jul 25, 2013 7:27 AM Flag

    Earnings will be the next trigger..

    It has shown a lot of strength over the past one month with 17% appreciation. It has crossed the hurdles, and is trading above $16. The volume over the past ten days has not been great, but the stock has appreciated very fast. The next trigger is the earnings on August 6, and positive surprises could help support the stock. Negative surprises would obviously not be welcome after a 75% rise in one year. The last quarter had seen a 2% rise in revenues. The company had reported a small net profit compared to losses on a yoy basis. The revenue growth has been good over the years. The revenues were $8.3 billion in 2012 compared to $5.4 billion in 2009 (~54% growth). The bottomline has been the main problem as the net loss has increased over the years. So it will be interesting to see if the company is able to report good numbers in Q2'13. The high level of debt is the main worry, and it is high compared to some peers. But if the bottomline becomes positive on a consistent basis, then the outlook will improve. In any case, it will be good if the debt comes down over time so that the margins improve. The debt on books on March 31 was $13.69 billion which is high in proportion to the other financial metrics of the company. The Markman hearing for the lawsuit filed by MGT Capital Investments (MGT) has been fixed for next year which is a bit in the distance. So earnings will be the event to watch. Long term growth will depend on the macro factors and the ability of the company to improve the margins and reduce the debt. The recent appreciation in the stock has made it a little extra vulnerable to corrections in case the earnings do not meet the estimates.

22.74+0.65(+2.94%)Jun 29 4:00 PMEDT