Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and MGM Resorts International (NYSE:MGM) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
The casino industry has become a global business, with major growth in Asia having taken away the industry’s former focus on Las Vegas. MGM is still fighting to take full advantage of that shift. Let’s take an early look at what’s been happening with MGM Resorts over the past quarter and what we’re likely to see in its quarterly report on Wednesday.
Stats on MGM Resorts
|Analyst EPS Estimate||($0.22)|
|Revenue Estimate||$2.31 billion|
|Change From Year-Ago Revenue||0.5%|
|Earnings Beats in Past 4 Quarters||2|
Will MGM Resorts be a winning bet for investors this quarter?
Despite the red ink, analysts have actually gotten more bullish on MGM over the past few months. Although they’ve only raised estimates for the just-ended quarter by a penny, they’ve dramatically narrowed their loss expectations for full-year 2013 by $0.20 per share. That optimism has helped lead an advance of more than 35% for the stock since mid-November.
Gaming stocks have been red-hot lately, and the major driver has been international growth. After fears of a slowdown in Macau, signs that Chinese economic growth may finally be coming back have boosted shares of MGM as well as Macau peers Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts, Limited (NASDAQ:WYNN). Macau-centered Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) has more than doubled in just the past six months on excitement about Asia. Yet with further Macau expansion efforts from Sands and Wynn still years away, the recent run may be getting ahead of itself.
Fortunately for MGM, Las Vegas has been coming back as a gaming destination. During December, gaming revenue rose 13%, helping both MGM and Caesars Entertainment Corp (NASDAQ:CZR) . With Caesars heavily in debt and having huge exposure to U.S. markets both in Las Vegas and throughout the country, domestic strength is essential for its success, and MGM also stands to benefit disproportionately from favorable U.S. trends compared with its more international peers.