MGM (MGM) Down 3.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for MGM Resorts (MGM). Shares have lost about 3.9% 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 drivers.
MGM Resorts Q2 Earnings & Revenues Beat, Rise Y/Y
MGM Resorts reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the third consecutive quarter. Moreover, the top and bottom lines increased on a year-over-year basis.
Earnings & Revenue Discussion
MGM Resorts reported earnings per share (EPS) of 59 cents, beating the Zacks Consensus Estimate of 53 cents. In the prior-year quarter, the company had reported EPS of 4 cent.
Total revenues were $3,942.2 million, surpassing the Zacks Consensus Estimate of $3,762 million by 4.8%. The top line jumped 20.7% year over year. The upside was primarily driven by growth in business volume and travel activity, primarily at MGM China and Las Vegas Strip Resorts.
MGM China
During the second quarter, MGM China's net revenues surged 418% year over year to $741 million. The upside was attributed to the removal of COVID-related travel restrictions in Macau and rise in visitation. MGM China casino revenues skyrocketed 454% year over year to $670 million.
MGM China's adjusted property earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) amounted to $209 million against ($52) million reported in the prior-year quarter.
Domestic Operations
Net revenues at Las Vegas Strip Resorts during the second quarter were $2.1 billion, flat year over year.
Adjusted property EBITDAR declined 6% year over year to $777 million. Casino revenues in the quarter under review were $492 million, down 1% year over year.
Net revenues from MGM's regional operations totaled $926 million, down 3% from the prior-year quarter’s levels. The decline was primarily due to disposition of Gold Strike Tunica in February 2023. Casino revenues in the quarter came in at $679 million, down 7% from the prior-year quarter’s levels.
Adjusted property EBITDAR was $294 million, down 14% from the year-ago quarter. Adjusted property EBITDAR margin contracted 270 basis points year over year to 31.7%.
Balance Sheet & Share Repurchase
MGM Resorts ended the second quarter with cash and cash equivalents of $3,843.4 million compared with $5,911.9 million reported in 2022-end. The company's long-term debt at the end of the quarter was $6,674 million, down from $7,432.8 million at 2022 end.
During the second quarter of 2023, MGM repurchased nearly 15 million shares for an aggregate of $626 million. As of Jun 30, management stated the availability of $1.4 billion under its February 2023 repurchase program.
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 23.52% due to these changes.
VGM Scores
At this time, MGM has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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. It comes with little surprise MGM has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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MGM Resorts International (MGM) : Free Stock Analysis Report
