MGM Resorts Faces Mixed Earnings Expectations Amid Market Challenges
MGM Resorts International (MGM), a leading name in the global casino and entertainment sector, holds a market capitalization of $9.8 billion. Based in Las Vegas, Nevada, the company offers a variety of services including lodging, dining, event hosting, and hospitality management across both casino and non-casino properties. Investors are awaiting the release of MGM’s fiscal 2024 fourth-quarter earnings, which is set for Wednesday, February 12, after market close.
Analysts project MGM will report a profit of $0.35 per share on a diluted basis, marking a significant drop of 67% compared to the $1.06 it posted in the same quarter last year. The company has managed to exceed Wall Street’s earnings per share (EPS) estimates in three of its last four quarterly reports, although it has missed expectations on one occasion.
For the entire fiscal year 2024, EPS expectations stand at $2.41, indicating a decline of 9.7% from $2.67 in fiscal 2023.
MGM’s stock has suffered a 21.6% decline over the past year, underperforming compared to the S&P 500’s gains of 24.6% and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) increase of 30.1% during the same period.
Several factors have contributed to MGM’s challenges. Weak performance in Las Vegas casinos, marked losses in its BetMGM joint venture due to high marketing costs, and compressed margins in Macau have all played a significant role.
The company’s Q3 earnings report on October 30 caused a noticeable 11% drop in stock price after it failed to meet both revenue and earnings expectations. This disappointing outcome was primarily driven by a decline in table game volumes in Las Vegas and decreasing margins in Macau, which were affected by one-time expenses and rising entertainment costs.
Despite the recent challenges, analysts maintain a bullish outlook on MGM stock, with a consensus “Strong Buy” rating. Out of 18 analysts covering the company, 15 recommend a “Strong Buy,” whereas three suggest a “Hold.” The average price target set by analysts is $49.42, implying a potential upside of 49.2% from current trading levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart
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