MGM Gains as Las Vegas Gambling Fuels Surprise ProfitChristopher Palmeri
MGM Resorts International, the largest casino operator on the Las Vegas Strip, rose to the highest price in more than a year after posting a surprise first-quarter profit amid a pickup in Nevada betting.
MGM Resorts jumped 5.4 percent to $14.55 at the close in New York, after the company reported first-quarter profit of 1 cent a share, compared with a 44-cent loss a year ago. It was the stock’s highest closing price since March 2012.
The results represent the best first quarter since the global economic downturn began five years ago, the company said in a statement. Profit was aided by record performance at MGM’s Chinese unit, as well as more domestic leisure travel to Las Vegas, Chief Executive Officer Jim Murren said in a telephone interview after the earnings were released.
“The domestic customer is coming back, they’re spending a bit more money,” Murren said. “There’s such operating leverage in this business, small changes could have nice results.”
Net income was $6.55 million, compared with a loss of $217.3 million a year earlier, the Las Vegas-based company said today in the statement. Excluding items, profit totaled 3 cents a share. Analysts projected a loss of 10 cents, on average.
First-quarter revenue increased 2.8 percent to $2.35 billion, MGM Resorts said, beating the $2.34 billion average of 21 estimates compiled by Bloomberg.
Profit at MGM’s wholly owned U.S. resorts, measured as earnings before interest, taxes, depreciation and amortization, rose 12 percent to $361 million. MGM’s China unit reported adjusted property Ebitda climbed 10 percent to $180 million. Industrywide, first-quarter gambling revenue in Macau increased by 15 percent, according to Bloomberg Industries research.
The company last month opened Hakkasan, a night club at the MGM Grand Hotel & Casino in Las Vegas, and announced plans for an outdoor dining and shopping area adjacent to its Monte Carlo resort there as well.
MGM China Holdings Ltd. paid a $500 million special dividend in March. The company’s board will consider other such dividends over the next two years, Murren said in the interview. MGM will not borrow money to pay for dividends or stock buybacks as Apple Inc. did this week and Las Vegas Sands Corp. said it was considering.
“We’re not Apple,” he said. “We’re not going to leverage up to pay out dividends.”
MGM Resorts has gained 25 percent this year, compared with an 12 percent gain for the Russell 1000 index.
(MGM Resorts held a conference call at 11 a.m. New York time. A replay can be accessed at www.mgmresorts.com.)