MGM Resorts Performing Better Than Its Peers

Top Defensive Stocks To Own For 2015

The gambling industry has been growing over the last few years, especially in Macau since it is the only region in China where gambling is legal. In fact, according to the Gaming Inspection and Coordination Bureau, Macau, revenue from this region has grown 20% in the first quarter of 2014. This increase has benefited most of the gambling companies, including MGM Resorts (MGM) and Wynn Resorts (WYNN).

MGM Resorts posted its first quarter numbers which beat analysts' expectations, sending its share price north as it benefited from growing revenue from Macau as well as from the domestic region.

By the Numbers

Revenue jumped 12% to $2.6 billion, over last year's quarter, as revenue from both the Macau region and the Las Vegas region surged. Macau has been one of the growing places for gambling and MGM witnessed an increase of 26% in its revenue from China.

Las Vegas is doing well with room revenue moving north, resulting in a 2% growth. Also, occupancy in Las Vegas grew well, clocking in at 92% from 90% earlier. Sales of food and beverage surged 6% over last year, as new retail outlets and more of conventions and banquet business drove revenue higher.

Total casino revenue climbed 13% over the prior year as people spent more on gambling during the holiday season. Moreover, MGM Resorts' domestic operations are also showing signs of improvement since consumer spending in the U.S. has increased. In fact, consumer spending in the U.S. inched up by 0.9% in March, much higher than 0.3% in February. This shows that people are willing to open their wallets and spend their hard earned dollars.

Earnings for the quarter also rose to $0.21 from $0.01 per share in the previous year. The surge in bottom line highlights the company's efficient cost management techniques. Also, its costs related to food and beverages as well as the hotel rooms decreased over the prior year's quarter.

Other Players

However, it is not only MGM Resorts that is witnessing growing revenue from the Macau region, but also other players such as Wynn Resorts. Wynn Resorts' top line surged 9.8% over last year, clocking in at $1.5 billion. This growth was helped by a 14.2% surge in revenue from the Macau region. However, Wynn experienced a decline of 1.5% in its Las Vegas operations. This is in contrast to that of MGM, which witnessed growing sales in the region. Wynn Resorts' bottom line jumped to $2.22 per share as compared to $2.00 per share, last year. Hence, MGM Resorts has been able to outperform its peers with better performance.

Bright Future Ahead

Also, the casino chain operator plans to open an indoor arena in 2016 in the Las Vegas strip. This arena will have a capacity of 20,000 and will host award shows and sports events such as boxing.

Also, MGM is in the process of having another resort in the New Cotai region in China since it has been experiencing great demand in this region. However, a slowdown in China might hamper the retailer's top line.

Conclusive Thoughts

MGM Resorts has been doing very well with growing top line and bottom line. Also, the company has been able to perform better than its peers. Moreover, the casino operator's plans to grow make the company even more attractive. Hence, MGM Resorts should be given a thought.

Currently 0.00/512345 Rating: 0.0/5 (0 votes)

Subscribe via Email Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

MORE GURUFOCUS LINKS

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

MGM STOCK PRICE CHART 24.68 (1y: +60%) $(function(){var seriesOptions=[],yAxisOptions=[],name='MGM',display='';Highcharts.setOptions({global:{useUTC:true}});var d=new Date();$current_day=d.getDay();if($current_day==5||$current_day==0||$current_day==6){day=4;}else{day=7;} seriesOptions[0]={id:name,animation:false,color:'#4572A7',lineWidth:1,name:name.toUpperCase()+' stock price',threshold:null,data:[[1368594000000,15.44],[1368680400000,15.26],[1368766800000,15.34],[1369026000000,15.5],[1369112400000,15.54],[1369198800000,15.08],[1369285200000,14.93],[1369371600000,14.93],[1369717200000,15.27],[1369803600000,15.09],[1369890000000,15.33],[1369976400000,15.17],[1370235600000,15.19],[1370322000000,15.01],[1370408400000,14.52],[1370494800000,14.58],[1370581200000,14.95],[1370840400000,15.18],[1370926800000,14.79],[1371013200000,14.76],[1371099600000,14.96],[1371186000000,14.75],[1371445200000,14.94],[1371531600000,15.1],[1371618000000,14.99],[1371704400000,14.06],[1371790800000,13.81],[1372050000000,13.25],[1372136400000,13.7],[1372222800000,14.32],[1372309200000,14.47],[1372395600000,14.78],[1372654800000,15.08],[1372741200000,14.87],[1372827600000,14.93],[1373000400000,15.37],[1373259600000,15.57],[1373346000000,15.44],[1373432400000,15.35],[1373518800000,15.26],[1373605200000,15.26],[1373864400000,15.72],[1373950800000,15.7],[1374037200000,15.69],[1374123600000,16.18],[1374210000000,16.18],[1374469200000,16.16],[1374555600000,16.12],[1374642000000,16.07],[1374728400000,15.83],[1374814800000,15.94],[1375074000000,15.96],[1375160400000,16.35],[1375246800000,16.31],[1375333200000,16.85],[1375419600000,16.45],[1375678800000,16.55],[1375765200000,16.91],[1375851600000,17.28],[1375938000000,17.49],[1376024400000,17.25],[1376283600000,17.23],[1376370000000,17.37],[1376456400000,17.36],[1376542800000,17.14],[1376629200000,17.19],[1376888400000,17.2],[1376974800000,17.24],[1377061200000,17.46],[1377147600000,17.82],[1377234000000,18],[1377493200000,18.15],[1377579600000,17.36],[1377666000000,17.68],[1377752400000,17.78],[1377838800000,17.69],[1378184400000,17.97],[1378270800000,18.25],[1378357200000,18.29],[1378443600000,18.42],[1378702800000,18.74],[1378789200000,19.04],[1378875600000,19.1],[1378962000000,18.87],[1379048400000,19.29],[1379307600000,19.3],[1379394000000,19.55],[1379! 480400000,19.77],[1379566800000,20.18],[1379653200000,19.92],[1379912400000,19.86],[1379998800000,20.14],[1380085200000,20.2],[1380171600000,20.27],[1380258000000,20.22],[1380517200000,20.44],[1380603600000,20.74],[1380690000000,20.7],[1380776400000,20.58],[1380862800000,20.59],[1381122000000,20.38],[1381208400000,19.94],[1381294800000,20.03],[1381381200000,20.34],[1381467600000,20.46],[1381726800000,20.59],[1381813200000,20.56],[1381899600000,20.69],[1381986000000,20.78],[1382072400000,20.69],[1382331600000,20.77],[1382418000000,20.57],[1382504400000,20.06],[1382590800000,20.64],[1382677200000,20.31],[1382936400000,19.95],[1383022800000,20.22],[1383109200000,20.29],[1383195600000,19.04],[1383282000000,19.3],[1383544800000,19.29],[1383631200000,19.15],[1383717600000,19.1],[1383804000000,18.58],[1383890400000,19.09],[1384149600000,19.2],[1384236000000,19.26],[1384322400000,19.7],[1384408800000,19.56],[1384495200000,19.45],[1384754400000,19.25],[1384840800000,18.57],[1384927200000,18.44],[1385013600000,18.89],[1385100000000,18.82],[1385359200000,18.84],[1385445600000,18.83],[1385532000000,19.18],[1385704800000,19.19],[1385964000000,19.23],[1386050400000,19.26],[1386136800000,19.71],[1386223200000,19.69],[1386309600000,20.17],[1386568800000,20.73],[1386655200000,20.86],[1386741600000,20.59],[1386828000000,20.83],[1386914400000,21.2],[1387173600000,21.71],[1387260000000,22.22],[1387346400000,22.65],[1387432800000,22.61],[1387519200000,22.72],[1387778400000,22.87],[1387864800000,23.08],[1388037600000,23.24],[1388124000000,23.15],[1388383200000,23.38],[1388469600000,23.52],[1388642400000,23.72],[1388728800000,23.45],[1388988000000,23.48],[1389074400000,24.51],[1389160800000,24.73],[1389247200000,24.98],[1389333600000,25.36],[1389592800000,25.25],[1389679200000,25.78],[1389765600000,25.72],[1389852000000,25.78],[1389938400000,26.41],[1390284000000,26.36],[1390370400000,25.74],[1390456800000,25.18],[1390543200000,23.78],[1390802400000,23.78],[1390888800000,24.05],[1390975200000,23.28],[1391061600000,24.11],[139! 114800000! 0,24.