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MGM (MGM) Down 2.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for MGM Resorts (MGM). Shares have lost about 2.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MGM due for a breakout? 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 drivers.

MGM Resorts Q4 Earnings And Revenues Beat Estimates

MGM Resorts reported fourth-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.

Earnings & Revenue Discussion

MGM Resorts reported diluted earnings per share (EPS) of 69 cents, beating the Zacks Consensus Estimate of a loss of $1.60. In the prior-year quarter, the company reported diluted EPS of 23 cents.

Total revenues were $3,592.2 million, surpassing the Zacks Consensus Estimate of $3,349 million. The top line increased 17.5% from $ 3,056.9 million reported in the year-ago period. The upside was primarily driven by increased business volume and travel activity, primarily at the Las Vegas Strip Resorts and Regional Operations.

MGM China

During the quarter, MGM China's net revenues fell 44.5% year over year to $174.7 million. The downside was mainly due to COVID-19-related property closures at MGM Cotai and travel and entry restrictions in Macau. VIP Table Games turnover declined 44% year over year to $980 million. MGM China casino revenues decreased 47% year over year to $145 million.

MGM China's adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) amounted to ($55) million against the adjusted property EBITDAR of $5 million reported in the prior-year quarter.

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the fourth quarter were $2,297.3 million, up 27.2% year over year. The company benefited 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 25.5% year over year to $877 million. Casino revenues in the quarter under review were $554 million, up 2% year over year.

During the quarter under review, net revenues from the company's regional operations totaled $991.5 million, up 10.2% from the prior-year quarter’s levels. Casino revenues in the quarter came in at $742 million compared with $697 million reported in the prior-year quarter.

Adjusted property EBITDAR was $320 million, up 3% year over year. Adjusted property EBITDAR margin contracted 215 basis points year over year to 32.2%.

Balance Sheet & Share Repurchase

MGM Resorts ended the fourth quarter with cash and cash equivalents of $5,911.9 million compared with $5,295.4 million reported in the previous quarter. The company's long-term debt at the end of the quarter stood at $ 7,432.8 million, down from $7,209.8 million as of Sep 30, 2022.

During the fourth quarter, the company repurchased nearly $11 million shares at an average price of $32.96 per share for $352 million. As of Dec 31, the company stated the availability of $475 million under its repurchase program.

2022 Highlights

Total revenues in 2022 came in at $13.1 billion compared with $9.7 billion in 2021.

Operating Income in 2022 came in at $1.4 billion compared with $2.3 billion in 2021.

In 2022, adjusted EPS came in at $(2.74) compared with (67) cents reported in the previous year.

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How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted -107.14% due to these changes.

VGM Scores

At this time, MGM has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 indicates a downward shift. 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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