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MGM Resorts (MGM) Posts Narrower-than-Expected Loss in Q3

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MGM Resorts International (MGM - Free Report) reported mixed third-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. While the bottom line beat the consensus mark for the second straight quarter, the top line lagged the same for the sixth consecutive quarter. Following the results, the company’s shares declined 5.6% in after-hour trading session yesterday.

Both top and bottom lines declined sharply year over year. Partial operations at the company’s certain domestic properties on account of restrictions owing to the coronavirus pandemic impacted the results.

Earnings & Revenues Discussion

MGM Resorts reported adjusted loss per share of $1.08, narrower than the Zacks Consensus Estimate of a loss of $1.10. In the prior-year quarter, the company had reported adjusted earnings per share of 31 cents.

Total revenues were $1,125.9 million, which missed the Zacks Consensus Estimate of $1,219 million. Moreover, the top line declined 66% year over year. The downside can primarily be attributed to the temporary closure of certain domestic properties during the quarter, and other restrictions in Macau and domestic market owing to the coronavirus pandemic. Moreover, travel restrictions impacted the company’s performance in the quarter under review.

MGM China

MGM China’s net revenues slumped 94% year over year to $47 million, owing the coronavirus pandemic. VIP Table Games Hold adjusted MGM China net revenues plunged 92% year over year to $54 million.

MGM China’s adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) loss was $96 million. In the prior-year quarter, the company had reported adjusted property EBITDAR of $184 million.

MGM Resorts International Price, Consensus and EPS Surprise MGM Resorts International Price, Consensus and EPS Surprise

MGM Resorts International price-consensus-eps-surprise-chart | MGM Resorts International Quote

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the third quarter were $481 million, down 68% year over year. Adjusted property declined 97% year over year to $15 million.

During quarter under review, net revenues from the company's regional operations totaled $557 million, down 40% from the prior-year quarter owing to dismal non gaming revenues and a partial quarter of operations at The Mirage and Park MGM. Adjusted property EBITDAR were $146 million, down 46% year over year. However, adjusted property EBITDAR margin contracted 261 basis points year over year.

Casino revenues in the quarter under review fell 44% year over year at the company's Las Vegas Strip Resorts primarily due to partial quarter of operations at The Mirage and Park MGM and operational restriction owing to the pandemic. Moreover, slots handle declined 41%. Notably, slots handle decreased 35% at its Regional Operations.

Balance Sheet

MGM Resorts ended the third quarter with cash and cash equivalents of $4,493.9 million compared with $2,329.6 million on Dec 31, 2019. The company’s long-term debt at the end of quarter stands at $11,414.7 million, compared with $11,168.9 million as of Dec 31, 2019.

Zacks Rank & a Key Pick

MGM Resorts, which shares space with Las Vegas Sands Corp. (LVS - Free Report) and Wynn Resorts, Limited (WYNN - Free Report) , currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same space includes Monarch Casino & Resort, Inc. (MCRI - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Monarch Casino & Resort have gained 34.4% in the past six months.

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