Is MGM Resorts International (NYSE:MGM) Losing Ground With Weak Casino Market

by Tom Carlson | Tuesday, Apr 8, 2014 | 1061 views

Boston, MA, 04/08/2014 (usastockreports) – MGM Resorts International (NYSE:MGM)’s stock is down by more than 15% in one month despite a strong performance in the last quarter. It may be due to gaming industry performance in specific locations such as Macau or Las Vegas.

Shift to online gaming

Casino market remains weak and continues to affect the performance of those companies who are focused only casino. The market is shifting towards online gaming rather than land based. So, the gaming market is highly competitive and forces companies to invest in the development of new innovative products which provide casino operators a competitive edge. Eilers Research estimates that the casino market will reach $2.9 billion by 2014 compared to online gaming of $220 million in the U.S. But, Asian countries will become the epicenter for gambling and places like Macau, Hong Kong, Manila and Singapore will drive growth for the gaming industry.

Impact over MGM

MGM Resorts International (NYSE:MGM) is majorly focused on casino business and delivered across its key geographies. It accounts more than 60% of total revenue. But, the Company has solid presence and services so that it continues to offer quality business across its locations despite weak performance in specific market. Moreover, China provides significant growth to the Company’s business.

In 4Q2013, MGM’s net revenue was increased by 10% year-over-year to $2.5 billion due to increase in revenue especially from Casino business of $1.6 billion (+13%) and MGM China’s of $926 million (+27%).

Operational highlights

MGM Resorts International (NYSE:MGM) improves its operating performance despite lower profit from Los Vagas and Detroit. MGM China’s adjusted EBITDA was $238 million, up by 35% that provide a strong growth to the Company’s adjusted EBITDA to $609.5 million. As of December 31, 2013, MGM’s cash balance was $1.8 billion, including $1.0 billion at MGM China. Debt to equity remains week for the Company with total debt of $2.8 billion.

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