MGM Stock Falls From Near Buy Point After Earnings Crush, Las Vegas Booms

MGM Resorts International (MGM) crushed earnings views for the fourth quarter, as a Las Vegas boom with the return of travel offset lingering China woes. MGM stock fell Thursday, ending a four-day rally. Casinos overall were mixed.

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MGM Earnings Rebound

The Las Vegas-based casino operator said late Wednesday that it swung to earnings of 12 cents per share from a loss of 90 cents a year ago. Year over year, revenue rebounded 105% to $3.057 billion, according to FactSet. But sales growth slowed from a gain of 683% in Q2 and 141% in Q3.

Wall Street forecast MGM earnings of one cent per share on sales of $2.772 billion, FactSet said.

Q4 results included a full quarter of results from MGM’s Aria and Vdara resorts after completing a sale-leaseback.

In Q4, revenue rebounded 277% at its Las Vegas Strip resorts, rising 26% vs. pre-pandemic Q4 2019 and increasing 5% vs. Q4 2019 excluding Aria.

Also in Q4, revenue rebounded 3% at MGM China but slowed sharply vs. the prior quarter and fell 57% vs. Q4 2019.

The quarter benefited from the removal of mandated operational and capacity restrictions, as well as an increase in travel, MGM said in a news release. In the year-ago quarter, MGM earnings crumbled due to temporary shutdowns and restrictions amid the Covid-19 pandemic.

Meanwhile, MGM China continued to be hit by travel and entry restrictions in Macau last quarter, MGM added. The casino company did not offer guidance for the current quarter in the earnings release.

Market Rally Sells Off On Hot Inflation, ‘Dramatically’ More-Hawkish Fed

MGM Stock, Casino Stocks

Shares of MGM fell 3% to 47.07 on the stock market today, well above the above the 50-day line. A three-week advance had lifted MGM to within 5% of a 51.27 buy point in a cup base. The stock is now in position to shape a possible handle. It’s still in buy range from a 46.74 early entry.

The relative strength line for MGM stock is approaching its October highs as well as pre-pandemic levels, according to MarketSmith chart analysis.

Among other casino stocks, Caesars Entertainment (CZR) dipped 0.4% Thursday and Boyd Gaming (byd) rose 1.8%. Macau-focsed Wynn Resorts (WYNN) edged up 0.4% and Las Vegas Sands (LVS) dipped 0.1%.

The coronavirus pandemic hit MGM severely in 2020. A bumpy, but accelerating, economic recovery since has led to uneven support for casino stocks as more Americans return to concerts, sporting events, and other in-person activities.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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