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MGM (MGM) Up 18.7% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for MGM Resorts (MGM). Shares have added about 18.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MGM due for a pullback? 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 catalysts.

MGM Resorts Q3 Earnings Miss Estimates, Revenues Top

MGM Resorts reported mixed third-quarter 2022 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top line rose year over year, while the bottom line declined from the prior-year quarter's figure.

Earnings & Revenue Discussion

MGM Resorts reported an adjusted loss per share of $1.39, missing the Zacks Consensus Estimate of earnings of 22 cents. In the prior-year quarter, the company reported adjusted earnings per share (EPS) of 3 cents.

Total revenues were $3,416.1 million, surpassing the Zacks Consensus Estimate of $3,259 million. The top line increased 26.2% from $2,707.5 million reported in the year-ago period. The upside was primarily driven by the rise in Casino, BetMGM and other sports betting and iGaming revenues.

MGM China

MGM China's net revenues fell 69.7% year over year to $87.5 million. The downside was mainly due to COVID-19-related property closures and restrictions. VIP Table Games turnover declined 82% year over year to $328 million. MGM China casino revenues decreased 72% year over year to $70 million.

MGM China's adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) amounted to ($70) million against the adjusted property EBITDAR of $7 million reported in the prior-year quarter.

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the third quarter were $ 2,301 million, up 66.6% year over year. The company benefitted from increased business volume and travel activity on a year-over-year basis. Also, the addition of The Cosmopolitan and Aria added to the upside.

Adjusted property EBITDAR surged 58.3% year over year to $846.4 million. Casino revenues in the quarter under review were $576 million, up 36% year over year.

During the quarter under review, net revenues from the company's regional operations totaled $973.9 million, up 5.3% from the prior-year quarter. Casino revenues in the quarter came in at $721 million compared with $720 million reported in the prior-year quarter.

Adjusted property EBITDAR was $322 million, down 7.5% year over year. Adjusted property EBITDAR margin contracted 458 basis points year over year to 33.1%.

Balance Sheet & Share Repurchase

MGM Resorts ended the third quarter with cash and cash equivalents of $5,295.4 million compared with $5,784.2 million reported in the previous quarter. The company's long-term debt at the end of the quarter stood at $7,209.8 million, down from $7,107.2 million as of Jun 30, 2022.

During the third quarter, the company repurchased nearly $10 million shares at an average price of $30.69 per share for $307 million. As of Sep 30, the company stated the availability of $827 million under its repurchase program.

The company declared a quarterly cash dividend of 0.25 cents per share. The dividend will be payable on Dec 15, 2022, to shareholders of record as of Dec 9, 2022.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -765.45% due to these changes.

VGM Scores

Currently, MGM has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MGM has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

MGM is part of the Zacks Gaming industry. Over the past month, Boyd Gaming (BYD), a stock from the same industry, has gained 11.5%. The company reported its results for the quarter ended September 2022 more than a month ago.

Boyd reported revenues of $877.26 million in the last reported quarter, representing a year-over-year change of +4.1%. EPS of $1.48 for the same period compares with $1.30 a year ago.

For the current quarter, Boyd is expected to post earnings of $1.48 per share, indicating a change of +9.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Boyd. Also, the stock has a VGM Score of A.

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