MGM Resorts (MGM) Q3 Earnings & Revenues Surpass Estimates

MGM Resorts International (NYSE:MGM) reported impressive results in third-quarter 2018, wherein both earnings and revenues outpaced the respective Zacks Consensus Estimate. Adjusted earnings of 24 cents trumped the consensus estimate of 18 cents. Including benefits from the sale of Mandarin Oriental Las Vegas, the bottom line came in at 26 cents, flat year over year.

Total revenues of $3,029.3 million came ahead of the consensus mark of $2,911 million and increased 7% year over year. The improvement was backed by higher revenues at MGM China.

Following the quarterly results, shares of MGM Resorts increased 1.2% in after-hours trading. However, in the past six months, the stock has lost 19.1% compared with the industry’s 30.2% decline.

Based on improving market scenario, the company seems to be optimistic about its fourth-quarter performance. The upside will be driven by newly opened properties and its efforts to improve margins.

MGM China

MGM China’s net revenues increased 37% year over year to $606 million, courtesy of net revenue contribution of $172 million from recently opened MGM Cotai.

The opening of MGM Cotai facilitated a 43% year-over-year increase in Main floor table games win. VIP table game wins increased 11% from the prior-year quarter number, primarily driven by an 8% gain from VIP table games win at MGM Macau.

MGM China’s adjusted property EBITDA (earnings before interest, taxes and amortization) increased 7% to $130 million from $121 million in the prior-year quarter. However, adjusted property EBITDA margin came in at 21.5%, marking a decline of 590 basis points (bps) from the year-ago quarter figure. Operating margin was 8.6% in the quarter under review.

MGM Resorts International Price, Consensus and EPS Surprise

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 of $2,231.5 million from the company's domestic resorts declined 2% from the prior-year quarter. Excluding MGM Springfield, the metric decreased 3% compared with the figure registered in the year-ago quarter. However, casino revenues inched up 1% owing to opening of MGM Springfield. On a same-store basis, casino revenues declined 3%.

Room revenues were down 5% due to a 3.9% fall in RevPAR (revenue per available room) at the company's Las Vegas Strip resorts. Las Vegas Strip RevPAR declined 3.9% in the reported quarter, with average daily rate (ADR) decreasing 1.9%. Occupancy decreased 200 bps.

Adjusted property EBITDA decreased 12% year over year to $627 million.
Income From Unconsolidated Affiliates – CityCenter HoldingsMGM’s urban complex, CityCenter, operates through two segments — Resort and Residential.

Net revenues from CityCenter were down 6% year over year to $294 million due to a decrease in both casino and non-casino revenues.

Operating income from resort operations summed $28 million in the reported quarter compared with $53 million in the prior-year quarter. Adjusted EBITDA from resort operations totaled $85 million, reflecting a 20% decline year over year.

Balance Sheet

MGM Resorts ended the third quarter with cash and cash equivalents of $1,302.7 million as of Sep 30, 2018 compared with $1,499.9 million as of Dec 31, 2017.

During the reported quarter, the company's board of directors approved a quarterly dividend of 12 cents per share, totaling $63 million. MGM Resorts also repurchased $176 million of shares of its common stock.

MGM Resorts, which shares space with Las Vegas Sands Corp. (NYSE:LVS) , currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Better-ranked stocks worth considering in the same space include Boyd Gaming Corporation (NYSE:BYD) and The Stars Group Inc. (NASDAQ:TSG) , each carrying a Zacks Rank #2 (Buy).

Boyd Gaming earnings for the current year is expected to increase by 9.6%.
Stars Group reported better-than-expected earnings in three of the trailing four quarters, with an average beat of 16.5%.

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