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MGM Resorts Up 22% in 6 Months: Can the Bull Run Continue?

Zacks Equity Research

MGM Resorts International MGM is gaining momentum on the back of strong portfolio, resort openings, other entertainment offerings in the pipeline and solid focus on non-gaming activities. Evidently, shares of the company have gained 21.8% in the past six months compared with the industry’s 9% growth. However, increasing competition, high-debt burden and trade war between the U.S. and China are concerning.

Let us discuss why investors should hold on to the stock for the time being.

Factors Driving Growth

MGM Resorts, one of the leading companies in the gaming and lodging industry, is well poised to grow on high brand awareness. The company’s superior business model, extensive non-gaming revenue opportunities, high-quality assets and attractive property locations are the primary growth drivers. In the past few years, the company has taken various initiatives to align every recognized brand into one global entertainment brand. This resulted in a disciplined business model with a unified view of strategy.

Furthermore, this January, MGM Resorts undertook a growth initiative called MGM 2020 and have been following up on that plan. If executed efficiently, MGM 2020 will deliver $200 million of EBITDA in 2020.  The company expects to achieve $100 million of EBITDA in 2019, up from $70 million last year. It also continues to work toward reducing consolidated net leverage to 3-4 times by the end of 2020. In third-quarter 2019, the company achieved cost savings on approximately $50 million, courtesy of MGM 2020 initiatives.

MGM Resorts has a Zacks Rank #3 (Hold). Some better-ranked stock in the Consumer Discretionary sector are Vista Outdoor Inc VSTO, YETI Holdings, Inc YETI and Studio City International Holdings Limited MSC. Vista Outdoor and YETI Holdings sport a Zacks Rank #1 (Strong Buy), whereas Studio City carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vista Outdoors’ current-year earnings are expected to rise 14.3%.

YETI Holdings has three-five year expected earnings per share growth rate of 15.8%.

Studio City surpassed estimates in all of the trailing four quarters, the average being 90%.

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Click to get this free report MGM Resorts International (MGM) : Free Stock Analysis Report Vista Outdoor Inc. (VSTO) : Free Stock Analysis Report YETI Holdings, Inc. (YETI) : Free Stock Analysis Report STUDIO CITY IH (MSC) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research