MGM Resorts International Stock Downgraded (MGM)

NEW YORK (TheStreet) -- MGM Resorts International (NYSE:MGM) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally weak debt management, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

• ACTIVE STOCK TRADERS: Check out TheStreet's special offer for Real Money, headlined by Jim Cramer, now!

Highlights from the ratings report include:

• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 104.2% when compared to the same quarter one year ago, falling from $3,441.99 million to -$145.45 million.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, MGM RESORTS INTERNATIONAL's return on equity significantly trails that of both the industry average and the S&P 500.
• The debt-to-equity ratio is very high at 2.33 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Even though the debt-to-equity ratio is weak, MGM's quick ratio is somewhat strong at 1.15, demonstrating the ability to handle short-term liquidity needs.
• The share price of MGM RESORTS INTERNATIONAL has not done very well: it is down 20.38% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
• MGM RESORTS INTERNATIONAL has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MGM RESORTS INTERNATIONAL turned its bottom line around by earning $5.56 versus -$3.23 in the prior year. For the next year, the market is expecting a contraction of 108.3% in earnings (-$0.46 versus $5.56).

MGM Resorts International, through its subsidiaries, owns and operates casino resorts. Its casino resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. The company has a P/E ratio of 1.8, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 17.7. MGM Resorts International has a market cap of $4.59 billion and is part of the services sector and leisure industry. Shares are down 10.1% year to date as of the close of trading on Wednesday.

You can view the full MGM Resorts International Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

For more information on MGM Resorts International click any of the following:

• MGM Resorts International Stock Price

• MGM Resorts International Analyst Ratings

• MGM Resorts International Key Stats & Profile

• MGM Resorts International Earnings

• MGM Resorts International Ratio Comparison

• MGM Resorts International Growth Rates

• MGM Resorts International Balance Sheet

• MGM Resorts International Cash Flow

• MGM Resorts International Income Statement