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MGM Resorts (MGM) Q1 Earnings Miss, Revenues Beat Estimates

Zacks Equity Research

MGM Resorts International MGM reported mixed first-quarter 2019 financial numbers, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Following the quarterly results, shares of the company declined 3.9% in after-hours trading on Apr 29.

Adjusted earnings of 12 cents per share missed the consensus estimate of 16 cents and also declined sharply from 34 cents registered in the prior-year quarter.

Total revenues came in at $3,176.9 million, outpacing the consensus mark of $3,130 million and increased 13% year over year. The improvement was backed by robust performance of MGM China.

MGM China

MGM China’s net revenues increased 23% year over year to $734 million owing to net revenue contribution of $301 million from MGM Cotai.

The opening of MGM Cotai facilitated a 23% year-over-year increase in Main floor table game wins. VIP table game wins increased 2% from the prior-year quarter, primarily driven by the opening of VIP junket rooms in September 2018 at MGM Cotai.

MGM China’s adjusted property EBITDA (earnings before interest, taxes and amortization) increased 26% to $191 million from $152 million in the prior-year quarter. Moreover, adjusted property EBITDA margin came in at 26%, marking an increase of 50 basis points (bps) from the year-ago quarter figure.

MGM Resorts International Price, Consensus and EPS Surprise

MGM Resorts International Price, Consensus and EPS Surprise | MGM Resorts International Quote

Domestic Operations

MGM Resorts owns and operates several properties in Las Vegas. It also owns a number of assets in Mississippi and Michigan.

Net revenues at Las Vegas Strip Resorts came in at $1.4 billion, flat year over year. Revenue per available room (RevPAR) increased 3.7% from the prior-year quarter. Meanwhile, adjusted property EBITDA decreased 10% year over year while EBITDA margin contracted 311 bps. The decline was primarily due to weaker performance at casino.

Net revenues of $804 million from the company's regional operations increased 21% from the prior-year quarter tally, driven by the opening of MGM Springfield and the acquisition of Empire City Casino. Adjusted property EBITDA was $207 million, mirroring a 24% increase from the year-ago quarter. Adjusted Property EBITDA margin expanded 61 bps year over year.

Casino revenues in the quarter under review decreased 13% year over year at the company's Las Vegas Strip Resorts due to a 17% decline in table games wins. However, the same increased 23% at the company's Regional Operations owing to the opening of MGM Springfield, and increase in slot and table game wins at MGM National Harbor.

At the Las Vegas Strip Resorts, food and beverage revenues rose 8% backed by the opening of new outlets at Park MGM as well as NoMad Las Vegas. The same increased 24% at Regional Operations, favored by the opening of MGM Springfield and the acquisition of Empire City Casino.

Balance Sheet

MGM Resorts ended the first quarter with cash and cash equivalents of $1,223.4 million as of Mar 31, 2019, compared with $1,526.8 million as of Dec 31, 2018.

During the reported quarter, the company's board of directors approved a quarterly dividend of 13 cents per share, totaling $70 million.

Zacks Rank & Key Pick

MGM Resorts, which shares space with Wynn Resorts WYNN and Caesars Entertainment Corporation CZR, currently carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the same space is Las Vegas Sands LVS, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Las Vegas Sands’ current-year earnings are likely to witness 0.3% growth.

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