MGM Resorts Narrows Loss - Analyst Blog
09 Agosto 2011 - 7:00AM
Zacks
MGM Resorts
International (MGM) reported second quarter 2011 adjusted
loss of 8 cents per share narrower than the Zacks Consensus
Estimate of a loss of 13 cents per share. The better-than-expected
result was attributable to the expansion of the company’s
controlling stake from 50% to 51% in MGM China Holdings Limited
when it went public on the Hong Kong stock exchange in June.
On a GAAP basis, MGM Resorts posted
a net profit of $3.44 billion or $6.22 per share compared with a
net loss of $883.5 million or $2.00 per share in the prior-year
quarter. The reported quarter includes a gain of $3.5 billion or
$6.30 per share from the MGM China transaction as opposed to a
charge of $1.12 billion or $1.64 per share related to an impairment
of the company’s investment in the CityCenter joint venture in the
year-ago quarter.
Net revenue jumped 17% year over
year to $1.81 billion, but was slightly below the Zacks Consensus
Estimate of $1.59 billion. The year-over-year increase in revenue
was mainly driven by strong results from Las Vegas Strip, as
economic condition continues to improve resulting in higher
demand.
Inside the Headline
Numbers
Total casino revenue inched up 1%
year over year to $797.5 million despite lower-than-normal table
games hold percentage. The overall table games hold, as a
percentage of turnover, was below the low-end of the company’s
expected range of 19% to 23% in the quarter. The percentage was
lower on a year-over-year basis as well. However, revenues from
slots climbed 4% during the quarter.
Revenues from rooms climbed 9% year
over year primarily attributable to higher RevPAR (revenue per
available room) at Las Vegas Strip (up 10%), as occupancy improved
from 93% to 94%, and Average daily rate (ADR) spiked 9.6% year over
year to $126. The company also experienced improved revenue in each
of its remaining segments except reimbursement costs, which dropped
1%.
MGM Resorts reported an operating
income of $3.7 billion compared with an operating loss of $1.0
billion in the year-earlier quarter. Operating income during the
quarter benefited from the Macau transaction. Further, adjusted
EBITDA during the quarter soared 51% to $366 million, due to strong
performance at MGM Macau and Las Vegas Resorts.
Financial
Position
At quarter end, MGM Resorts’ total
cash balance was $922 million. Long-term debt outstanding was $12.6
billion.
Outlook
MGM Resorts provided positive
outlook for the second half of 2011.
Our Take
We believe MGM Resorts is ideally
positioned to take advantage of both domestic and international
opportunities, and is executing well on its business strategy.
Moreover, the acquisition of a controlling interest in MGM China
will strengthen its position in Macau and ensure higher
profitability. Business at Las Vegas has begun to stabilize, MGM
Grand Detroit also reported strong growth and results at MGM Macau
and CityCenter were also impressive in the reported quarter.
The company holds a Zacks #3 Rank
(short-term Hold rating). Our long-term recommendation remains
Neutral.
MGM Resorts’ close competitors
Las Vegas Sands Corp. (LVS) recorded adjusted
earnings of 54 cents per share in the second quarter of 2011,
beating the Zacks Consensus Estimate of 44 cents as well as the
year-ago quarter's earnings of 17 cents.
LAS VEGAS SANDS (LVS): Free Stock Analysis Report
MGM RESORTS INT (MGM): Free Stock Analysis Report
Zacks Investment Research
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