MGM Resorts (NYSE: MGM) reported earnings on Wednesday and shares of the company shot up. But was there really anything to get excited about?
Revenues for the latest quarter were down 3% to $1.5 billion compared with the year-ago quarter, and adjusted EBITDA for wholly owned properties was $314 million, down 13%. Companywide, MGM Resorts lost $318 million in the quarter, or $0.72 per share, of which $0.50 was impairment charges. So even without charges, the company is reporting a huge loss of $0.22 per share.
So why bounce yesterday? Didn't we already know this was coming? A few weeks ago, MGM Resorts released preliminary earnings, and that looked eerily similar to what we saw yesterday.
Management did have positive comments about the first quarter next year and the convention business in Las Vegas, but that shouldn't come as a big surprise. This echoed sentiments we heard from Wynn Resorts (Nasdaq: WYNN) earlier this week.
Internationally, MGM Macau had its best quarter, with operating income of $61 million before depreciation. MGM Resorts also said there are 16 new hotels under development with the hospitality division, with the first hotel expected next year in China. But this is chump change for a company with $12.6 billion of debt at the end of the quarter.
Were shareholders really that excited that management said the convention business would pick up in 2011, or that the Republicans won the House? Yesterday's move looks like a little wishful thinking to me. Las Vegas' CityCenter may be improving to bad from absolutely terrible, but the development still isn't what MGM Resorts had hoped it would be.
In the U.S., there are better bets like Penn National (Nasdaq: PENN) or Boyd Gaming (NYSE: BYD) that are already profitable and have exposure to an economic recovery. Even after retiring $1.2 billion of debt in November, MGM Resorts will have a long way to go before it'll be out of this Fool's doghouse.
Press-release follies
On the lighter side, MGM Resorts sent out a press release this morning to make sure everyone knew it was not affiliated with MGM Studios, which is reorganizing its operations. Thanks for clearing that up and giving me a nice chuckle.
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