Solid China Operation To Aid MGM Resorts (MGM) In Q2 Earnings
Zacks Investment Research | Jul 23, 2019 08:51AM ET
MGM Resorts International (NYSE:MGM) is scheduled to report second-quarter 2019 results on Jul 25. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 25%. However, its bottom line outpaced expectations in three out of the last four quarters, the average beat being 4%.
Q2 Expectations
The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at 25 cents, indicating a 3.9% decline from the year-ago quarter’s reported number. Over the past 30 days, the company’s earnings estimates have remained unchanged. For quarterly revenues, the consensus mark is pinned at nearly $3.24 billion, suggesting 13.3% growth from the prior-year quarter’s reported figure.
Let’s delve deeper to find out how the company’s top and bottom lines will shape up this earnings season.
Factors Likely to Impact Q2 Results
In the quarter to be reported, MGM Resorts’ top line is likely to be driven by robust performance of China operations. The Zacks Consensus Estimate for revenues from operations in China stands at $729 million, indicating a 29.9% improvement from the figure registered a year ago. Robust convention and room rate too bode well for MGM Resorts.
Furthermore, the company’s properties are well diversified within the United States. Particularly, its Las Vegas business is anticipated to perform well in the second quarter, backed by an improving economic scenario and increased tourism numbers. Meanwhile, MGM Resorts is consistently making important investments wherever it sees an opportunity.
However, increasing competition and high-debt burden remain significant headwinds for the company. Also, higher costs can weigh on its margins and profits in the second quarter.
Meanwhile, the trade war between Beijing and Washington continues to hurt gambling stocks, and MGM Resorts is no exception. We believe that trade war-related worries have also significantly affected the company’s second-quarter results.
What Does the Zacks Model Say?
Our proven model does not conclusively show that MGM Resorts is likely to beat earnings estimates in the second quarter. This is because a stock needs to have both — a positive Zacks Investment Research
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