Loss Widens at MGM Resorts

Zacks

MGM Resorts International’s (MGM) fourth quarter 2011 adjusted loss of 21 cents per share worsened from the Zacks Consensus Estimate of 18 cents loss per share as well as prior-year quarter’s loss of 20 cents loss per share.

However, on a GAAP basis, MGM Resorts posted net loss of 23 cents per share compared with a net loss of 29 cents per share in the prior-year quarter. In full-fiscal 2011, earnings per share were $5.62 versus a loss of $3.19 per share recorded in 2010.

Net revenue jumped substantially year over year to $2.29 billion. In full-fiscal 2011, net revenue grew 29.6% year over year to $7.84 million.

Inside the Headline Numbers

Casino revenue related to wholly owned domestic resorts increased 8% year over year because of a higher table games hold percentage. The overall table games hold, as a percentage of turnover, was on the higher end of the company’s usual expected range of 19% to 23% as against the lower end of the range recoded in the year-ago quarter. However, revenues from slots increased 3%. During the fourth quarter, MGM’s wholly owned properties experienced increases in both volume and win in both table games and slots, after a long wait from the fourth quarter of 2007.

Revenues from rooms climbed 10% year over year, primarily attributable to higher RevPAR (revenue per available room). Leisure and FIT rates have been the biggest drivers of the upside to RevPAR gain.

MGM Resorts reported an operating income of $91.0 million compared with $107.0 million in the year-earlier quarter.

Financial Position

At quarter end, MGM Resorts’ total cash balance was $1.87 billion. Long-term debt outstanding was $13.5 billion.

Our Take

We believe MGM Resorts is ideally positioned to take advantage of both domestic and international opportunities, and is executing well on its business strategy. The company also remains hopeful of development in China. 

The company which competes with Las Vegas Sands Corp. (LVS) holds a Zacks #3 Rank (short-term Hold rating). Our long-term recommendation remains Neutral.

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