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Solid China Operation to Aid MGM Resorts (MGM) in Q2 Earnings

Zacks Equity Research

MGM Resorts International 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.

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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 Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MGM Resorts has an Earnings ESP of +0.58% and a Zacks Rank #4, which make surprise prediction difficult.

MGM Resorts International Price and EPS Surprise

 

MGM Resorts International Price and EPS Surprise
MGM Resorts International Price and EPS Surprise

MGM Resorts International price-eps-surprise | MGM Resorts International Quote

Stocks With Favorable Combinations

Here are a few stocks from the Consumer Discretionary sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the second quarter:

Las Vegas Sands LVS has an Earnings ESP of +0.41% and it currently carries a Zacks Rank #2. The company is scheduled to report quarterly numbers on Jul 24, after the market closes. You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaWorld SEAS has an Earnings ESP of +11.01% and a Zacks Rank #3 at present. The company is scheduled to report quarterly numbers on Aug 6, before the opening bell.

Melco Resorts MLCO currently has an Earnings ESP of +27.12% and a Zacks Rank #3.

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
 
MGM Resorts International (MGM) : Free Stock Analysis Report
 
SeaWorld Entertainment, Inc. (SEAS) : Free Stock Analysis Report
 
Melco Resorts & Entertainment Limited (MLCO) : Free Stock Analysis Report
 
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