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MGM Resorts (MGM) Stock Gains on Q3 Earnings & Revenues Beat

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MGM Resorts International MGM reported better-than-expected third-quarter 2021 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. While the bottom line surpassed the Zacks Consensus Estimate for the sixth straight quarter, the top line beat the same for the fourth consecutive quarter. Both the metrics also improved on a year-over-year basis. Following the results, shares of the company gained 3.4% in the after-hour trading session yesterday.

The company’s third-quarter results benefited from robust demand for its gaming entertainment offerings.

Bill Hornbuckle, CEO and president of MGM Resorts International, said “The completion of our asset light strategy will allow us to simplify our corporate structure and bolster our liquidity. I am also excited about our long-term growth prospects, including: BetMGM, which continues to establish itself as a clear leader in U.S. sports betting and iGaming; our selection as Osaka’s partner to build and operate a large-scale integrated resort in Japan; and the announcement of our agreement to acquire the operations of The Cosmopolitan of Las Vegas.”

Earnings & Revenue Discussion

MGM Resorts reported an adjusted earnings per share of 3 cents, which compared favorably with the Zacks Consensus Estimate of a loss of 4 cents. In the prior-year quarter, it had reported an adjusted loss of $1.08 per share.

Total revenues were $2,707.5 million, which surpassed the Zacks Consensus Estimate of $2,469 million. The top line improved a whopping 140.5% from $1,126 million in the year-ago period. The upside was primarily driven by the rise in Casino, MGM China, BetMGM, and other sports betting and iGaming revenues.

MGM Resorts International Price, Consensus and EPS Surprise

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

MGM Resorts International price-consensus-eps-surprise-chart | MGM Resorts International Quote

MGM China

MGM China’s net revenues soared 517% year over year to $289 million. However, the figure is still down 61% compared with third-quarter 2019. VIP Table Games Hold adjusted MGM China net revenues improved 403% year over year to $272 million.

MGM China’s adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) amounted to $7 million against a loss of $96 million in the prior-year quarter. VIP Table Games Hold adjusted MGM China adjusted property EBITDAR loss was $2 million compared with a loss of $93 million in the prior-year quarter.

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the third quarter were $1.4 billion, up 187% year over year, owing to the removal of operational and capacity restrictions, and increase in travel. However, the segment’s revenues are still down 8% compared with third-quarter 2019. Adjusted property EBITDAR improved to $535 million from $15 million in the prior-year quarter. Casino revenues in the quarter under review were $423 million, up 123% year over year.

During the quarter under review, net revenues from the company's regional operations totaled $925 million, up 66% from the prior-year quarter. This upside can primarily be attributed to the elimination of mandated operational and capacity restrictions, and increase in travel. Adjusted property EBITDAR was $348 million, up 139% year over year on account of a rise in casino revenues and cost-saving efforts. Adjusted property EBITDAR margin expanded 886 basis points year over year to 37.6%.

Casino revenues in the quarter under review climbed 55% from the year-ago level of $720 million.

Balance Sheet & Share Repurchase

MGM Resorts ended the third quarter with cash and cash equivalents of $5,570.8 million compared with $5,101.6 million on Dec 31, 2020. The company’s long-term debt at the end of quarter stood at $11,618.9 million, down from $12,376.7 million as of Dec 31, 2021.

During the third quarter, the company repurchased nearly $17 million of shares at an average price of $39.88 per share for $687 million.

Zacks Rank & Key Picks

MGM Resorts carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the same space include Accel Entertainment, Inc. ACEL, Boyd Gaming Corporation BYD and International Game Technology PLC IGT. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Accel Entertainment’s fiscal 2022 earnings is likely to witness growth of 23.8% year over year.

Boyd Gaming has an impressive long-term earnings growth rate of 42.8%.

International Game Technology fiscal 2022 earnings is likely to witness growth of 945.2% year over year.


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