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MGM Resorts Beats on Revenue, Misses Earnings; Shares Up 2.5%

Story Highlights

MGM Resorts’ earnings for the quarter failed to surpass expectations. However, the rise in revenues and earnings from the year-ago quarter indicates strong prospects for the company.

MGM Resorts International (NYSE: MGM) posted mixed results for the second quarter ended June 30, 2022. While revenues topped consensus estimates, earnings missed the same. Following the Q2 results, shares of the company gained 2.5% to close at $35.04 in extended trade.

MGM Resorts is a hospitality and entertainment company with operations across the globe.

Revenues Rise & Key Operating Metrics Improve

MGM Resorts reported quarterly net revenues of $3.3 billion, which denotes a growth of 44% from the previous year’s quarter. Moreover, the figure comfortably outpaced the consensus estimate of $3.03 billion.

The company reported earnings per share (EPS) of $0.03, which compares favorably to a loss of $0.13 per share reported in the prior year. However, the figure failed to surpass the consensus estimate of an EPS of $0.24.

Notably, MGM Resorts reported an operating income of $2.4 billion. This represents a massive growth from the year-ago quarter’s figure of $263.8 million.

Room occupancy improved to 92% from 77% in the company’s flagship Las Vegas Strip Resorts. Revenue per available room also increased by 82% from the year-ago quarter to $208.

Meanwhile, the company also announced measures to reward its shareholders. During the quarter, the company repurchased about 32 million shares worth $1.1 billion. Further, on August 3, the company approved a dividend of $0.0025 per share. The dividend will be paid on September 15, 2022, to holders of record on September 9, 2022.

Rising Website Traffic Predicted Growth

Although earnings failed to surpass estimates, MGM Resorts posted improved results from the previous year. The growth in the company’s website traffic acted as a precursor to its strong results.

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into MGM Resorts’ performance this quarter.

According to the tool, the MGM Resorts website recorded a 33.61% monthly rise in global visits in June, compared to the same period last year. Moreover, year-to-date, MGM Resorts’ website traffic increased by 39.29%, compared to the previous year.

Learn how Website Traffic can help you research your favorite stocks.

Wall Street’s Take

Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on four Buys and two Holds. The MGM average price target of $47.17 implies the stock has an upside potential of 37.9% from current levels.

Key Takeaways

Even though MGM Resorts’ earnings came in lower than expectations, the company recorded profits for the quarter as compared to a loss in the same period last year. With revenues rising too, the company stands to benefit from the relaxed restrictions and a rebound in travel demand.

However, rising inflation and an impending recession remain concerns for the company.

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