We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MGM Resorts Prospects Bright on Macau Revival, Risks Stay
Read MoreHide Full Article
On Mar 21, we issued an updated research report on global hospitality company MGM Resorts International (MGM - Free Report) .
Domestic Ventures
MGM Resorts’ Las Vegas business is doing well on the back of the ongoing economic recovery and growing tourism in the region. It is expected to continue growing over the long term driven by a strong convention calendar and the completion of several capital initiatives on the Las Vegas Strip.
The opening of MGM National Harbor, a casino resort, on Dec 8, 2016, also bodes well. Another casino resort in Western Massachusetts is set to be developed on roughly 14 acres of land in downtown Springfield, MA, the construction of which is slated for completion in late 2018. Both these resorts include a number of gaming as well as non-gaming amenities.
Thus, as a result of these efforts and openings, the company is expected to witness increased occupancy and better pricing in the domestic markets. This should drive incremental revenues at the company’s properties in the region. Moreover, these projects demonstrate the company’s commitment toward diversifying its business.
Macau Recovers
A tough operating environment in Macau weighed on the stock in 2015 and for the most part of 2016.
However, the mecca of casino gaming – Macau – has started to look up as gaming revenues in the region grew on an annual basis in February as well. This marked the seventh consecutive month of rise, signaling at steady recovery from the slump triggered by China's anti-graft corruption drive since May 2014 and slow economic growth.
We are also positive on the initiatives undertaken by the company to boost revenues and junket productivity in Macau as it anticipates a positive trend buoyed by upgrades to main gaming floor products and marketing initiatives. Resultantly, revenues at MGM China improved slightly on a year-over-year basis in fourth-quarter 2016, after witnessing consistent year-over-year declines since the second quarter of 2014. In addition, VIP table games’ revenues increased 7% in the quarter.
Moreover, MGM Cotai’s construction is in the final stages and is expected to boost revenues when it opens in the second quarter of 2017.
Also, the government of China is considering measures to support Macau’s economy in all aspects and introduce favorable policies, which are expected to improve visitation pattern and boost tourism.
Despite the improving gaming trends in Macao, we believe that it will take some time for the company to regain its past glory in the region.
Our Take
MGM Resorts’ Profit Growth Plan that was initiated in Aug 2015 has begun reaping benefits as is evident from the EBITDA growth recorded in 2016. In fact, fourth-quarter 2016 marked the seventh consecutive quarter of double-digit EBITDA growth at the company. The improving gaming trends in Macau should further drive growth.
However, MGM Resorts faces stiff competition in the markets of Las Vegas and Macau due to increased hotel openings and promotional activities.
In fact, the company’s upcoming project in the Cotai Strip is expected to face competition from several Chinese casino operators and the Sands Cotai Central project of Las Vegas Sands Corp. (LVS - Free Report) . Wynn Resorts Ltd. (WYNN - Free Report) also opened a full-scale integrated resort, Wynn Palace, on the Cotai Strip in Aug 2016.
Nonetheless, we note that MGM Resorts’ shares have outperformed the Zacks categorized Gaming industry over the past one year. While the stock surged 25.3%, the industry gained 14.6% during the same time period.
Given the company’s strong fundamentals, superior business model, extensive non-gaming revenue opportunities, high quality assets and attractive property locations, this Zacks Rank #3 (Hold) stock should keep performing well in the quarters ahead.
The Zacks Consensus Estimate for Pinnacle Entertainment’s full-year 2017 earnings climbed more than 100% over the last 60 days. Further, for 2017, EPS is expected to increase over100%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
MGM Resorts Prospects Bright on Macau Revival, Risks Stay
On Mar 21, we issued an updated research report on global hospitality company MGM Resorts International (MGM - Free Report) .
Domestic Ventures
MGM Resorts’ Las Vegas business is doing well on the back of the ongoing economic recovery and growing tourism in the region. It is expected to continue growing over the long term driven by a strong convention calendar and the completion of several capital initiatives on the Las Vegas Strip.
The opening of MGM National Harbor, a casino resort, on Dec 8, 2016, also bodes well. Another casino resort in Western Massachusetts is set to be developed on roughly 14 acres of land in downtown Springfield, MA, the construction of which is slated for completion in late 2018. Both these resorts include a number of gaming as well as non-gaming amenities.
Thus, as a result of these efforts and openings, the company is expected to witness increased occupancy and better pricing in the domestic markets. This should drive incremental revenues at the company’s properties in the region. Moreover, these projects demonstrate the company’s commitment toward diversifying its business.
Macau Recovers
A tough operating environment in Macau weighed on the stock in 2015 and for the most part of 2016.
However, the mecca of casino gaming – Macau – has started to look up as gaming revenues in the region grew on an annual basis in February as well. This marked the seventh consecutive month of rise, signaling at steady recovery from the slump triggered by China's anti-graft corruption drive since May 2014 and slow economic growth.
We are also positive on the initiatives undertaken by the company to boost revenues and junket productivity in Macau as it anticipates a positive trend buoyed by upgrades to main gaming floor products and marketing initiatives. Resultantly, revenues at MGM China improved slightly on a year-over-year basis in fourth-quarter 2016, after witnessing consistent year-over-year declines since the second quarter of 2014. In addition, VIP table games’ revenues increased 7% in the quarter.
Moreover, MGM Cotai’s construction is in the final stages and is expected to boost revenues when it opens in the second quarter of 2017.
Also, the government of China is considering measures to support Macau’s economy in all aspects and introduce favorable policies, which are expected to improve visitation pattern and boost tourism.
Despite the improving gaming trends in Macao, we believe that it will take some time for the company to regain its past glory in the region.
Our Take
MGM Resorts’ Profit Growth Plan that was initiated in Aug 2015 has begun reaping benefits as is evident from the EBITDA growth recorded in 2016. In fact, fourth-quarter 2016 marked the seventh consecutive quarter of double-digit EBITDA growth at the company. The improving gaming trends in Macau should further drive growth.
However, MGM Resorts faces stiff competition in the markets of Las Vegas and Macau due to increased hotel openings and promotional activities.
In fact, the company’s upcoming project in the Cotai Strip is expected to face competition from several Chinese casino operators and the Sands Cotai Central project of Las Vegas Sands Corp. (LVS - Free Report) . Wynn Resorts Ltd. (WYNN - Free Report) also opened a full-scale integrated resort, Wynn Palace, on the Cotai Strip in Aug 2016.
Nonetheless, we note that MGM Resorts’ shares have outperformed the Zacks categorized Gaming industry over the past one year. While the stock surged 25.3%, the industry gained 14.6% during the same time period.
Given the company’s strong fundamentals, superior business model, extensive non-gaming revenue opportunities, high quality assets and attractive property locations, this Zacks Rank #3 (Hold) stock should keep performing well in the quarters ahead.
A better-ranked stock in this sector is Pinnacle Entertainment, Inc. , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Pinnacle Entertainment’s full-year 2017 earnings climbed more than 100% over the last 60 days. Further, for 2017, EPS is expected to increase over100%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>