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MGM Resorts International Stock Hold Recommendation Reiterated (MGM)

NEW YORK (TheStreet) -- MGM Resorts International (NYSE:MGM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 103.0% when compared to the same quarter one year prior, rising from -$217.25 million to $6.55 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MGM RESORTS INTERNATIONAL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MGM RESORTS INTERNATIONAL swung to a loss, reporting -$3.61 versus $5.56 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$3.61).
  • 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.
  • Net operating cash flow has decreased to $194.66 million or 33.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

MGM Resorts International, through its wholly owned subsidiaries, owns and/or operates casino resorts. The company operates in two segments, Wholly Owned Domestic Resorts and MGM China. Its resorts offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. MGM Resorts International has a market cap of $7.1 billion and is part of the services sector and leisure industry. Shares are up 27% year to date as of the close of trading on Friday.

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.

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