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MGM (MGM) Down 14.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for MGM Resorts (MGM). Shares have lost about 14.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MGM due for a breakout? Before we dive into how investors and analysts have reacted as 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 Beat Estimates

MGM Resorts reported first-quarter 2022 results, wherein earnings and revenues beat the Zacks Consensus Estimate. While the bottom line surpassed the consensus estimates for the eighth straight quarter, the top line beat the same for the sixth consecutive quarter. Earnings and revenues improved on a year-over-year basis.

The company's results in the quarter benefited from robust domestic operations, courtesy of weekend demand and a better mix of business. The company announced that its midweek business has been improving every quarter, and its group base business has been growing following a tough January.

Earnings & Revenue Discussion

MGM Resorts reported adjusted earnings per share of 1 cent, against the Zacks Consensus Estimate of a loss of 9 cents. In the prior-year quarter, the company had reported an adjusted loss of 68 cents per share.

Total revenues were $2,854.3 million, which surpassed the Zacks Consensus Estimate of $2,749 million. The top line soared 73.2% from $1,647.7 million in the year-ago period. The upside was primarily driven by the rise in Casino, BetMGM, and other sports betting and iGaming revenues.

MGM China

MGM China's net revenues fell 9% year over year to $268 million. The figure is down 63% compared to the first quarter of 2019. VIP Table Games turnover declined 59% year over year to $963 million. MGM China casino revenues decreased 12% year over year to $231 million.

MGM China's adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) amounted to ($25.7) million against adjusted property EBITDAR of $4.8 million in the prior-year quarter.

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the first quarter were $1.7 billion, up 205% year over year, owing to the addition of Aria. The company's revenues were negatively impacted by the decline in business volume and travel due to the spread of the Omicron variant at the beginning of the quarter. Adjusted property EBITDAR improved a whopping 449% year over year to $594 million. Casino revenues in the quarter under review were $475 million, up 105% year over year.

During the quarter under review, net revenues from the company's regional operations totaled $891 million, up 25% from the prior-year quarter. This growth can primarily be attributable to the elimination of mandated operational as well as capacity restrictions and an increase in travel.

Adjusted property EBITDAR was $313 million, up 29% year over year. Adjusted property EBITDAR margin expanded 120 basis points year over year to 35.2%.

Casino revenues in the quarter under review rose 18% from the year-ago level of $704 million.

Balance Sheet & Share Repurchase

MGM Resorts ended the first quarter with cash and cash equivalents of $2,719.1 million compared with $4,703.1 million on Dec 31, 2021. The company's long-term debt at the end of the quarter stood at $10,507.1 million, down from $11,770.8 million as of Dec 31, 2021.

During the first quarter, the company repurchased nearly $23 million of shares at an average price of $42.92 per share for $1 billion.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 98.43% due to these changes.

VGM Scores

At this time, MGM has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MGM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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