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MGM Resorts (MGM) Up 24% in the Past Year: More Upside Left?
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MGM Resorts International (MGM - Free Report) will likely benefit from the solid Sports betting and iGaming prospects, strategic partnerships and expansion efforts. Also, strength in the Macau business bodes well for the company.
Shares of MGM Resorts have rallied 24.3% in the past year compared with the industry’s 16.7% growth. A solid earnings surprise history backed the price performance. MGM Resorts earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Earnings estimates for full-year 2023 and 2024 have moved up 19.3% and 21.7%, respectively, in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy). This indicates robust fundamentals and expectations of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Driving Growth
Sports betting and iGaming continues to be a major growth driver for the company. In the first half of 2023, BetMGM generated $944 million in net revenues from operations, marking a 55% increase compared with year-ago levels. Given the positive market momentum and its unique and unparalleled online and offline offerings, the company remains on track to achieve its long-term growth with revenue expectations of $1.8-$2 billion in 2023. The company expects to achieve positive EBITDA in the second half of 2023. The company is confident about the improved design and functionality of the BetMGM app launch (of a single wallet) and omnichannel growth prospects.
Image Source: Zacks Investment Research
MGM is implementing the single account, single wallet system, which enhances its Las Vegas footprint and omnichannel strategy. This will help BetMGM to improve acquisition and engagement through the BetMGM app. The company expects to launch this feature in 14 markets, covering over half of its database. The acquisition of Angstrom by its partners further strengthens BetMGM's offerings and pricing tools, aiming to boost customer satisfaction and margins.
MGM derives a solid share of its revenues from Macau — the largest gaming destination in the world. It is undertaking initiatives to increase revenues and junket productivity in Macau. During second-quarter 2023, Macau business reported adjusted property EBITDAR of $209 million, up 21% from the second quarter of 2019, with a 28% margin. The gross gaming revenues also surpassed the second quarter in 2019 figures, driven by a 37% increase in main floor winnings compared with 2019 levels. Moving ahead, the company anticipates the momentum to continue, buoyed by upgrades to main gaming floor products and marketing initiatives.
MGM Resorts recently announced a strategic licensing agreement with Marriott to offer reciprocal earning and redemption benefits to members of the Marriott Bonvoy and MGM Rewards loyalty program. The partnership facilitates the development of the MGM Collection with Marriott Bonvoy. Starting in October, the alliance will facilitate customers to earn and redeem points at 17 MGM resorts and more than 8,500 Marriott Bonvoy's properties. The initiative allows members to book through Marriott's digital platforms and MGM Resorts' channels and link their respective loyalty accounts. The agreement marks an expansion in benefits for loyalty members of both companies.
The company emphasizes international expansion to drive growth. To this end, MGM Resorts made progress related to development plans in Japan and Dubai. It is working on its plans to expand its footprint in New York. The company is currently working through the RFA process. The total spending expectation for its New York expansion is approximately $2 billion (including licensing fee). The company expects to receive a New York license in the first half of 2024. The company intends to invest more than $2 billion into its properties to boost customer experiences and services. Also, the initiative is likely to support the needed technology platform and advanced analytics to better engage and service its guests and drive market share in its principal markets.
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of 28.5%, on average. Shares of RCL have gained 155% in the past year.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 54.5% and 180.3%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 41.5% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 104.9% and 537.9%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 39.1%, on average. Shares of SKX have increased 29.6% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 8.5% and 41.2%, respectively, from the year-ago period’s levels.
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MGM Resorts (MGM) Up 24% in the Past Year: More Upside Left?
MGM Resorts International (MGM - Free Report) will likely benefit from the solid Sports betting and iGaming prospects, strategic partnerships and expansion efforts. Also, strength in the Macau business bodes well for the company.
Shares of MGM Resorts have rallied 24.3% in the past year compared with the industry’s 16.7% growth. A solid earnings surprise history backed the price performance. MGM Resorts earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Earnings estimates for full-year 2023 and 2024 have moved up 19.3% and 21.7%, respectively, in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy). This indicates robust fundamentals and expectations of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Driving Growth
Sports betting and iGaming continues to be a major growth driver for the company. In the first half of 2023, BetMGM generated $944 million in net revenues from operations, marking a 55% increase compared with year-ago levels. Given the positive market momentum and its unique and unparalleled online and offline offerings, the company remains on track to achieve its long-term growth with revenue expectations of $1.8-$2 billion in 2023. The company expects to achieve positive EBITDA in the second half of 2023. The company is confident about the improved design and functionality of the BetMGM app launch (of a single wallet) and omnichannel growth prospects.
Image Source: Zacks Investment Research
MGM is implementing the single account, single wallet system, which enhances its Las Vegas footprint and omnichannel strategy. This will help BetMGM to improve acquisition and engagement through the BetMGM app. The company expects to launch this feature in 14 markets, covering over half of its database. The acquisition of Angstrom by its partners further strengthens BetMGM's offerings and pricing tools, aiming to boost customer satisfaction and margins.
MGM derives a solid share of its revenues from Macau — the largest gaming destination in the world. It is undertaking initiatives to increase revenues and junket productivity in Macau. During second-quarter 2023, Macau business reported adjusted property EBITDAR of $209 million, up 21% from the second quarter of 2019, with a 28% margin. The gross gaming revenues also surpassed the second quarter in 2019 figures, driven by a 37% increase in main floor winnings compared with 2019 levels. Moving ahead, the company anticipates the momentum to continue, buoyed by upgrades to main gaming floor products and marketing initiatives.
MGM Resorts recently announced a strategic licensing agreement with Marriott to offer reciprocal earning and redemption benefits to members of the Marriott Bonvoy and MGM Rewards loyalty program. The partnership facilitates the development of the MGM Collection with Marriott Bonvoy. Starting in October, the alliance will facilitate customers to earn and redeem points at 17 MGM resorts and more than 8,500 Marriott Bonvoy's properties. The initiative allows members to book through Marriott's digital platforms and MGM Resorts' channels and link their respective loyalty accounts. The agreement marks an expansion in benefits for loyalty members of both companies.
The company emphasizes international expansion to drive growth. To this end, MGM Resorts made progress related to development plans in Japan and Dubai. It is working on its plans to expand its footprint in New York. The company is currently working through the RFA process. The total spending expectation for its New York expansion is approximately $2 billion (including licensing fee). The company expects to receive a New York license in the first half of 2024. The company intends to invest more than $2 billion into its properties to boost customer experiences and services. Also, the initiative is likely to support the needed technology platform and advanced analytics to better engage and service its guests and drive market share in its principal markets.
Other Top Picks
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of 28.5%, on average. Shares of RCL have gained 155% in the past year.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 54.5% and 180.3%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 41.5% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 104.9% and 537.9%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 39.1%, on average. Shares of SKX have increased 29.6% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 8.5% and 41.2%, respectively, from the year-ago period’s levels.