MGM Resorts International (MGM) has reported its Q4 earnings. The casino giant stock started the day off in the red following the news but has since made a strong recovery. In this column, we discuss the performance of the name. Further, we offer our thoughts and projections for the stock here in 2018.
Price action
MGM stock is priced at over 30 times trailing earnings, but the growth trajectory of the name partially justifies this pricing. That said, the stock is still about four points off its 52-week highs:
Source: Yahoo Finance
We believe that the performance of the name, in conjunction with a robust economy that has left people with higher discretionary income suggests the outlook of the name is strong. This was reflected in 2017.
Q4 highlights
The company had a strong Q4. Net revenues increased 5% over the prior year quarter at MGM’s domestic resorts came in at $1.9 billion but decreased 3% on a same-store basis, excluding contributions from MGM National Harbor. Excluding Monte Carlo and MGM National Harbor, net revenues decreased 1% compared to the prior-year quarter. Factoring in expenses, operating was $305 million at MGM’s domestic resorts, a 2% decrease over the prior-year quarter. What about earnings?
Diluted earnings per share for the fourth quarter were $2.42, including a non-recurring, non-cash income tax benefit of $2.52 due to enactment of U.S. Tax Reform at the end of 2017, compared to diluted earnings per share of $0.04 in the prior-year quarter. This is a positive. Net income attributable to MGM Resorts was $1.4 billion, including a non-recurring, non-cash income tax benefit of $1.4 billion due to U.S. Tax Reform, compared to $25 million in the prior-year quarter.
What is more, Adjusted Property EBITDA increased 1% over the prior year quarter to $496 million at domestic resorts, but decreased 3% on a same-store basis. Excluding Monte Carlo and MGM National Harbor, Adjusted Property EBITDA increased slightly compared to the prior-year quarter. Same-store Adjusted Property EBITDA margin was 26.9% at domestic resorts, compared to 27.0% in the prior-year quarter. However, it was 27.5% excluding Monte Carlo and MGM National Harbor.
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