MGM (MGM) Up 7.3% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for MGM Resorts (MGM). Shares have added about 7.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.

MGM Resorts Q2 Earnings & Revenues Top Estimates, Rise Y/Y

MGM Resorts reported second-quarter 2021 results, wherein earnings and revenues beat the Zacks Consensus Estimate. While the bottom line surpassed the consensus estimate for the fifth straight quarter, the top line beat the consensus mark for the third consecutive quarter. Also, the top and the bottom line increased on a year-over-year basis.

Earnings & Revenue Discussion

MGM Resorts reported adjusted loss per share of 13 cents, narrower than the Zacks Consensus Estimate of a loss of 36 cents. In the prior-year quarter, the company had reported adjusted loss of $1.52 per share.

Total revenues were $2,268 million, which topped the Zacks Consensus Estimate of $2,162 million. The top line surged 682.6% from $289.8 million reported 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 China

MGM China’s net revenues rose 836% year over year to $311 million. VIP Table Games Hold adjusted MGM China net revenues improved 895% year over year to $317 million.

MGM China’s adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) amounted to $9 million against a loss of $116 million in the prior-year quarter. Moreover, VIP Table Games Hold adjusted MGM China adjusted property EBITDAR was $13 million against the loss of $118 million in the prior-year quarter.

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the second quarter were $1 billion, up 566% year over year owing to the easing of operational and capacity restrictions and increase in travel due to the easing of cross-border restrictions over time. Adjusted property EBITDAR improved to $397 million from a loss of $104 million in the prior-year quarter. Casino revenues in the quarter under review were $353 million, up 461% year over year.

During the quarter under review, net revenues from the company's regional operations totaled $856 million, up 859% from the prior-year quarter. This growth was majorly attributable to the continuous easing of state-wise restrictions. Adjusted property EBITDAR were $318 million, up 22% year over year due to a rise in casino revenues and cost-saving efforts. Moreover, adjusted property EBITDAR margin expanded 855 basis points year over year to 37%.

Casino revenues in the quarter under review rose 817% from the year-ago level of $77 million, primarily due to slots and a higher end customer base at its Regional Operations.

Balance Sheet & Share Repurchase

MGM Resorts ended the second quarter with cash and cash equivalents of $5,626.2 million compared with $5,101.6 million on Dec 31, 2020. The company’s long-term debt at the end of quarter stood at $12,574.9 million, down from $13,245.4 million as of Mar 31, 2021.

During the second quarter, the company repurchased nearly $5.6 million of shares at an average price of $39.48 per share for $220 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 60.34% due to these changes.

VGM Scores

At this time, MGM has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, MGM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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