MGM Resorts is set to report its Q1 2024 earnings on May 1, with expectations of strong performance driven by a rebound in Macau and continued strength in its Las Vegas properties. Analysts predict sales to reach $4.25 billion, representing an 18% increase from last year, with earnings per share expected to be around $0.55, slightly ahead of consensus estimates. Las Vegas Strip properties are anticipated to perform well due to a strong U.S. gambling market and the recent Super Bowl held in Las Vegas, with customers spending more at casinos and hotel room rates trending higher. In Macau, MGM is seeing a strong rebound in tourist arrivals and spending, with market-wide gaming revenue reaching pre-pandemic levels.
Despite fluctuations, MGM stock has seen significant gains over the past three years, increasing by 50% from early 2021 to around $45 currently, outpacing the S&P 500’s 35% increase over the same period. However, returns for MGM stock were volatile, with a 42% increase in 2021, a -25% decline in 2022, and a 33% increase in 2023. In comparison, the S&P 500 had returns of 27% in 2021, -19% in 2022, and 24% in 2023, with MGM underperforming in 2022. The Trefis High Quality Portfolio, comprising 30 stocks, consistently outperformed the S&P 500 each year, suggesting that diversification may provide better returns with less risk.
Amid an uncertain macroeconomic environment with high oil prices and elevated interest rates, the question arises whether MGM could face a repeat performance of underperforming the S&P 500 in the next 12 months or see a strong jump in its stock price. Analysts are cautiously optimistic about MGM Resorts stock, currently pricing it at $47 per share, about 10% above the current market price. The stock trades at about 18x projected 2024 earnings, considered reasonable given the company’s growth prospects. While MGM’s exposure to Macau is smaller compared to its competitors, the recovery in the region is expected to boost the company’s earnings, along with progress in its interactive gaming initiatives such as BetMGM online sports.
Investors are advised to consider Trefis Market Beating Portfolios for potential investment opportunities, with analysis suggesting that diversification may provide better returns with less risk compared to individual stocks. As MGM Resorts prepares to announce its Q1 2024 earnings, the company’s performance is closely watched, particularly in light of the rebound in Macau and positive trends in its Las Vegas properties. With a strong recovery in the gambling market and increased customer spending, MGM Resorts may be well-positioned to deliver solid results, despite challenges posed by the current economic climate. Investors are advised to stay informed and consider the potential for growth and risks associated with investing in MGM Resorts stock.
