Shares of global hospitality company, MGM Resorts International (MGM - Free Report) , rallied to a 52-week high of $27.04 on Oct 6. However, the company ended the day’s trading a trifle lower at $26.80. Meanwhile, year to date, the stock has returned nearly 18%.
Notably, gross gaming revenues (GGR) for the month of September rose 7.4% on a yearly basis to roughly $2.3 billion or 18.4 billion patacas, per the Macau Gaming Inspection and Coordination Bureau. This marked the second consecutive month of growth, following the extended slump of over two years.
Notably, new resorts including Wynn Resorts Ltd.’s (WYNN - Free Report) Wynn Palace (opened on Aug 22) and Las Vegas Sands Corp.’s (LVS - Free Report) subsidiary, Sands China Ltd.’s The Parisian (opened on Sep 13), attracted visits by tourists and leisure gamblers, which helped boost revenues.
The Macau region has been struggling over the past few quarters due to the Chinese government’s anti-graft corruption drive, which has lowered footfall at casinos. However, Macau operators have been adding more non-gaming facilities in order to attract tourists and recreational gamblers, in order to revive revenues. Such efforts have finally started yielding results, indicating that the Macau market might be on the recovery path.
This bodes well for MGM Resorts as Macau is a key operating region for the company. The company’s $2.9 billion casino hotel is also set to open in the Cotai area of Macau in the second quarter of 2017.
Meanwhile, MGM Resorts’ Las Vegas business is doing well on the back of ongoing economic recovery and growing tourism, which is driving incremental revenues at the company’s properties in the region.
Moreover, the company is also considering expansion opportunities in New Jersey, Massachusetts and Maryland. The construction of MGM National Harbor, a casino resort, is also underway. The resort will include gaming as well as non-gaming amenities, and is set to open on Dec 8, 2016. On the back of this new opening, the company is expected to witness increased occupancy and better pricing in the domestic markets.
Meanwhile, the company’s profit growth plan that began in Aug 2015 has already started reaping benefits and is poised to boost profits further. The plan focuses on improving revenues and reducing expenses by making optimum use of resources, improving purchasing power, as well as utilizing technology to improve analytics and forecasting tools.
MGM Resorts currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the sector is Boyd Gaming Corporation (BYD - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boyd Gaming’s 2016 earnings climbed 3.8% over the last 60 days. The company’s earnings have surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 39.87%.
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