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MGM & Caesars Stock: Nevada Casinos Scored Big in November

Nevada casinos posted winnings of $1.32 billion in November, according to the Nevada Gaming Control Board.
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Nevada casinos, including MGM Resorts (MGM) - Get MGM Resorts International Report and Caesars Entertainment (CZR) - Get Caesars Entertainment Inc Report, posted winnings of $1.32 billion in November, according to the Nevada Gaming Control Board.

November represented the ninth straight month over $1 billion, with house winnings gaining 8% from $1.22 billion in October. But November trailed last July’s record of $1.36 billion.

A New Streak for Nevada Casinos

The nine-month streak topped the previous mark of eight that was set from October 2006 to May 2007, prior to the Great Recession that began in December 2007, Board Senior Analyst Michael Lawton told the Associated Press.

Sports betting winnings for casinos hit an all-time high of $72 million in November, topping the previous peak of $61.8 million in November 2020. Most of the sports bets came on mobile apps.

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“The continued acceptance of mobile sports wagering by customers is driving these results,” Lawton said.

A Mixed Bag for MGM Stock

As for casino stocks, Morningstar analyst Dan Wasiolek offers a mixed prognosis for MGM.

“No-moat MGM Resorts is facing material near-term headwinds from Covid-19 as well as elevated operational risk in Macao from government plans to increase supervision of casinos,” he wrote last month.

“Still, we think MGM has a healthy liquidity profile to see it through this turmoil and remains positioned for the attractive long-term growth opportunities in Macao (22% of pre-pandemic 2019 EBITDAR), U.S. sports betting, and Japan (accounting for an estimated 10% of 2027 EBITDAR, the first year of likely operation).”

Wasiolek puts fair value for MGM stock at $42.50. It recently traded at $45.23, up 2%, and has soared 43% year to date.