Las Vegas casinos pace MGM Resorts in Q2

MGM Resorts (NYSE:MGM) reports revenue for its U.S.-based casinos rose 6% to $1.639B in Q2.

Growth by casino property: Bellagio +9.6% to $332.2M; MGM Grand Las Vegas +6.4% to $233.5M; Mandalay Bay +13.7% to $233.5M; The Mirage +3% to $146.7M; The Luxor +10% to $91M.

Revenue for MGM China fell 1% to $827M during the quarter.

Adjusted Property EBITDA +8% Y/Y to $643M.

MGM +2.5% premarket

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Comments (1)
  • Howard Jay Klein
    , contributor
    Comments (872) | Send Message
    MGM continues to operate a good, sound business both here and in Macau. All their Vegas properties benefitted from uptick in hotel occupancy and bump in table games hold percentage. Slot decline was small, 1%, but definitely reflecting a worrisome trend market-wide that traditional mid-level slot players who once comprised the heaviest lift of Vegas growth pre-recession have banked down their spend and in fact, many have started to disappear while younger slot demo people are not showing up. While table game holds are subject to gyrations due to high end play, slot wins are the most predictable metric of longer term trends. Nothing to worry since MGM is on their game, but worth noting. There is little doubt that MGM will hold its own in its core Vegas business going forward. A combination of excellent properties, sensible management and a debt load that is entirely manageable for the foreseeable out years. The biggest questions facing MGM investors now are these:
    1. What will happen in Massachusetts where the company already has won a license to operate in Springfield? Will voters give thumbs up or down on the upcoming referendum state wide? Its a double edged sword for MGM. On one hand if thumbs up they get going in a new market---yet northeast markets are already dragging from saturation. And right behind them will be NY State, probably around 2017-18 with a property likely to be sited at Saratoga, making Springfield a tempting target market for a casino there. Plus they'll have to compete with another new casino in metro Boston--not far away at all. Best news is that the Massachusetts property all give the company a good east coast footprint that their brand partnership with Mohegan could not withstand due to the overall saturation of the northeast.
    If thumbs down, MGM can petition for repayment of various fees and leave clear, possibly better off in the long run. Call it a neutral.
    2. New Cotai property will be a plus without doubt. China market has plenty of growth room. That's the real plus here.
    Overall the company proves basics do count. Sound financial management, good product, well managed by operatives who understand their market make the company a good long term hold with not a dramatic, but a nice enough upside to reward patience.
    5 Aug 2014, 03:00 PM Reply Like
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