MGM Resorts International Withdrew Its Financial Forecast For 2020, CEO Quits

Jim Murren will be stepping down, from the role of CEO of MGM Resorts International (NYSE: MGM). Since 2008, Murren was serving the company in the current role and has served it through its thick and thin, before that he had also donned the hat of CFO of the company. When the gambling industry was rocked by the subprime mortgage meltdown like many other sectors, he was the one who drove the company through turbulent times. Murren’s contributions to the business will be remembered in streamlining the organisation. He shall serve in the current role until a successor is found. The company is accessing the impact of the spread of Coronavirus and has withdrawn its financial forecast for 2020. It had to suspend its operations at two of its properties situated in Macau since 5 February 2020, for a government-directed 15-day period, to stop the spread of the virus outbreak.

Holding company, MGM Resorts International (NYSE: MGM), through its subsidiaries, owns and operates casino resorts. The Group operates through two divisions, namely, MGM China and domestic resorts. The company believes that entertainment is a fundamental human need. The development of the MGM Macau resort, an integrated hotel and entertainment resort in Macau with Casino forms part of MGM China’s operations.

The non-gaming operations, which include hotel, food and beverage, entertainment and other non-gaming amenities, are classified under domestic resorts segment. Sportsbook wagering and casino operations with a range of slots, table games, & races also form part of this segment. The company has a representative base of 80 thousand plus globally, which are proud of being associated with one of the World’s Most Admired Companies® (as per FORTUNE® Magazine).

The Group’s casino resorts offer a variety of amenities under its resort operations such as gaming, hotel, convention centres, dining, and entertainment. The S&P 500® global entertainment company has a national and international presence with state-of-the-art casinos and hotels, restaurants, nightlife and casinos. Las Vegas, the DNA of the company, the most innovative ideas are inspired by the DNA; the company strives to create and develop immersive experiences that redefine entertainment and make it more pleasurable.

Through its suite of Las Vegas-inspired brands, MGM Resorts creates immersive, iconic experiences. The MGM Resorts portfolio encompasses some of the most recognisable resort brands in the industry, along with 30 unique hotel and destination gaming offerings. The company is expanding in the United States through acquiring Empire City Casino operations in New York and Hard Rock Rocksino operations in Ohio.

The company is expanding globally as well and opened properties in Massachusetts, Macau and Shanghai in 2018. MGM Resorts has undergone a huge transformation over the course of the last one decade. Las Vegas is an important part of company’s history, and the company tries to incorporate its roots in their offerings. The company believes that entertainment is a fundamental human need.

The origin of the company can be traced back to late 1960s, Kirk Kerkorian, an eighth-grade dropout is widely credited as among the early pioneers of Las Vegas. In 1962, the largest hotel in the world at that time, the International Hotel was built by Kirk Kerkorian. Four years later, he built MGM Grand Hotel even larger than the Empire State Building.

Later in 2000, MGM acquired Mirage Resorts, which marked its presence in the gaming industry at that time. MGM MIRAGE, the new company, acquired Mandalay Resort Group in 2005. In 2010, the company went through a name change, MGM Resorts International.

Through a unified strategy, the company has transformed from a casino driven business to an international entertainment brand, which offers the world’s most exciting and diverse experiences. No other entity with similar roots has seen this kind of transformation.

Consolidated Results for the full-year & Fourth Quarter 2019

The company announced results for FY19 period ended 31st December 2019 on 12th February 2020. The company’s net revenues (consolidated) surged by 10 per cent to $12.9 billion in FY19 in contrast to $11.8 billion in FY18. The company’s net income attributable to MGM Resorts soared to $2.0 billion in FY19 as compared to $467 million in FY18. The Diluted earnings per share of the company increased to $3.88 in FY19 as compared to $0.81 in FY18. In comparison to Adjusted EPS of $0.95 in FY18, the Adjusted EPS in FY19 was recorded at $0.77. The company’s Adjusted EBITDAR (consolidated) surged to 6 per cent to $3.0 billion in FY19 in contrast to $2.8 billion in FY18.

The company’s Q4 net revenues (consolidated) surged by 4 per cent to $3.2 billion during the period. The operating income increased to $3.0 billion in Q4 FY19 as compared to $336 million in Q4 FY18. The Net income attributable to MGM Resorts for Q4 FY19 was around $2.0 billion. In the current quarter, the company’s Diluted earnings per share stood at $3.91. The Company’s quarterly dividend stood at $0.13 per share.

MGM Resorts-Stock price performance

Daily Chart as on 12-February-20, after the market close (Source: Thomson Reuters)

On 12th February 2020, while writing after the market close, MGM shares were clocking a market price of USD 33.66 per share at the New York Stock Exchange. The company’s market capitalisation was at $17.33 billion post the close of the market.

On 17th January 2020, the shares of MGM have touched a new peak of USD 34.64 and reached the lowest price level of USD 23.68 on 03rd June 2019 in the last 52 weeks. The company’s shares were at 2.83 per cent lower from the 52-week high price mark and 42.15 per cent higher than the 52-week low price mark at the current trading level, as can be seen in the price chart.

The stock’s traded volume was hovering around 4.95k at the time of writing after the market close. The company’s 5-day stock’s daily average traded volume was 6,862,313.40; 30 days daily average traded volume- 5,640,013.17- and 90-days daily average traded volume – 4,804,249.09. The volatility of the company’s stock was 49 per cent higher as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 1.49 with a dividend yield of 1.78 per cent.

The shares of the company have delivered a positive return of 8.62 per cent in the last quarter. The company’s stock surged by 1.17 per cent from the start of the year to till date. The company’s stock has given investors 16.59 per cent of a positive return in the last year.