Why is MGM ( MGM ) down 5.7% since its last earnings report?

It has been about a month since MGM Resorts (MGM) last reported earnings. Shares have lost about 5.7% in that time, underperforming 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 the most recent earnings report in order to better understand the important catalysts.

Top estimates for MGM Resorts’ first quarter earnings and revenue

MGM Resorts reported impressive first-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Both profits and profits increased year-on-year. Strong results at MGM China and luxury resort properties in Las Vegas contributed to the positive result.

Discussion about earnings and revenues

MGM Resorts reported earnings per share (EPS) of 74, surpassing the Zacks Consensus Estimate of 60 cents. In the year-ago quarter, adjusted EPS was 44 cents.

Total revenues were $4.38 billion, surpassing the Zacks Consensus Estimate of $4.2 billion by 4.8%. Revenues grew 13.2% year-on-year thanks to strong contributions from MGM China.

MGM China

In the first quarter, MGM China’s net revenues increased 71% year-over-year to $1.06 billion. The positive result was attributed to an increase in activity following the lifting of Covid-19 related travel and entry restrictions in the previous year. MGM China casino revenue increased 66% year over year to $920 million.

MGM China’s adjusted earnings before interest, taxes, depreciation, amortization and restructuring or occupancy (EBITDAR) was $301 million, compared to $169 million reported in the year-ago quarter.

Domestic operations

Las Vegas Strip Resorts net revenues were $2.26 billion, up 3.6% year-over-year, primarily driven by ADR growth.

Real Estate Adjusted EBITDAR declined 1% year-over-year to $828 million. Casino revenue was $498 million, down 1% year-over-year.

Net revenues from regional operations were $909 million, down 3.8% year-over-year. The negative factors included the sale of Gold Strike Tunica (in February 2023) and a decline in casino revenues. Real estate adjusted EBITDAR was $274 million, down 12% year-over-year.

Balance sheet and share repurchase

MGM Resorts ended the first quarter with cash and cash equivalents of $2.72 billion, compared to $2.93 billion at year-end 2023. Long-term debt was $6.27 billion at the end of the quarter, up from $6.34 billion at the end of 2023.

In the first quarter of 2024, MGM repurchased almost 12 million shares for a total amount of $511 million.

How have estimates changed since then?

It turns out that new estimates have been trending upwards over the past month.

As a result of these changes, the consensus estimate moved by 24.24%.

VGM results

Right now, MGM has a nice B growth score, a rating with the same momentum score. Plotting a somewhat similar path, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, MGM carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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