Updated Research Report on MGM Resorts
On Apr 10, 2014, we issued an updated research report on MGM Resorts International (MGM).
On Feb 19, this leading casino resort company reported solid fourth quarter results with earnings and revenue beating the Zacks Consensus Estimate. Adjusted earnings of 11 cents per share for the fourth quarter compared favorably with the prior-year quarter loss of 23 cents per share. The results were driven by higher revenues and increased adjusted earnings before interests, taxes, depreciation and amortization.
Total revenue increased 10% year over year, thanks to improving Las Vegas business. Though Casino revenues at wholly-owned domestic resorts declined 2%, MGM China’s net revenue was up 27.0% year over year due to increases in main floor table games and VIP revenues.
The company’s properties are well diversified in the U.S., which protects it from regional downturns. Driven by its efforts to expand in the lucrative domestic market, the company is expected to witness increased occupancy and better pricing. Going forward, limited supply, a moderate increase in visits in the Las Vegas market and improving trends at its urban complex - CityCenter should bode well for domestic growth. MGM Resorts expects its Las Vegas business to grow further in 2014, gaining from solid convention bookings and completion of several capital initiatives on the Las Vegas Strip. We believe the company stands to gain market share with economic recovery.
Besides the domestic market, the company is progressing well overseas too. MGM derives a solid share of its revenues from Macau, the largest gaming destination in the world. Despite concerns over sustained economic growth in China, the company expects the Macau market to continue to grow as a result of a large and growing Asian middle class population and infrastructure improvements, which are expected to facilitate more convenient travel to and within Macau.
The company also expects a positive trend in Macau buoyed by a gradual recovery in VIP gaming, upgrades to main gaming floor products, marketing initiatives as well as substantial growth in Macau mass market gaming revenues. MGM Resorts plans to double its presence in Macau with the launch of MGM Cotai project in 2016 in Cotai Strip, Macau. On the international front, Japan and South Korea have also caught the attention of the company. Driven by solid results and a strong outlook for 2014, estimates for 2014 and 2015 largely moved upward over the last 60 days for this Zacks Rank #2 (Buy) company.
Other Stocks to Consider
Investors interested in the gaming industry may consider stocks like Caesars Acquisition Company (CACQ), Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS). While Caesars Acquisition and Wynn Resorts sport a Zacks Rank #1 (Strong Buy), Las Vegas Sands carry a Zacks Rank #2.
Read the Full Research Report on LVS
Read the Full Research Report on WYNN
Read the Full Research Report on MGM
Read the Full Research Report on CACQ
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