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TheStreet Open House

Will MGM Resorts (MGM) Stock Gain On Japan Casino Speculation?

NEW YORK (TheStreet) -- MGM Resorts International  (MGM) has reportedly scouted the world's biggest fish market as a potential site for the casino resort it wants to build in Japan, sources told Bloomberg.

CEO James Murren visited central Tokyo's Tsukiji market in March to survey the sprawling warren of fish stalls on about 231,000 square meters (57 acres) of land that the the city may sell after its vendors relocate, sources added.

The site, one of the largest parcels ever offered for redevelopment in the Japanese capital and located near the luxury shopping enclave of Ginza, would be an alternative to the Odaiba district that is seen as the top contender for a gaming resort, Bloomberg noted.

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Shares of MGM Resorts are down -0.36% to $24.95.

TheStreet Ratings team rates MGM RESORTS INTERNATIONAL as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MGM RESORTS INTERNATIONAL (MGM) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MGM's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 4.0%. 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. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MGM RESORTS INTERNATIONAL continued to lose money by earning -$0.33 versus -$3.61 in the prior year. This year, the market expects an improvement in earnings ($0.63 versus -$0.33).
  • 37.27% is the gross profit margin for MGM RESORTS INTERNATIONAL which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MGM's net profit margin of 4.08% significantly trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • Although MGM's debt-to-equity ratio of 2.90 is very high, it is currently less than that of the industry average. Along with the unfavorable debt-to-equity ratio, MGM maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: MGM Ratings Report
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