What Happened?
Shares of hospitality and casino entertainment company MGM Resorts (NYSE:MGM) jumped 18.2% in the afternoon session after the company delivered solid fourth quarter results, surpassing analysts' EPS expectations while posting a slight revenue beat. Revenue growth was roughly flat year on year, primarily due to a 6% drop in Las Vegas Strip Resorts revenue, which faced a tough comparison against the prior year's Formula 1 event. However, strength in regional operations and MGM China helped offset some of this weakness, with regional casino revenue rising 7% and MGM China revenue increasing 4%. Margins were mixed. Adjusted EBITDA missed expectations by a wide margin, as lower earnings from the Las Vegas Strip weighed on overall profitability. However, steady performance in regional and international markets helped limit the downside. Despite this, adjusted EPS came in at $0.45, beating Wall Street expectations.
Looking ahead, MGM remains optimistic about 2025, highlighting strong convention bookings and improved traction of its digital business. Overall, this was a strong quarter.
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What The Market Is Telling Us
MGM Resorts’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for MGM Resorts and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 11.7% on the news that the company reported weak third-quarter earnings. Its Casino revenue missed, and its EBITDA fell short of Wall Street's estimates. Overall, this was a softer quarter.
MGM Resorts is up 19.8% since the beginning of the year, but at $40.33 per share, it is still trading 15.6% below its 52-week high of $47.78 from March 2024. Investors who bought $1,000 worth of MGM Resorts’s shares 5 years ago would now be looking at an investment worth $1,268.
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