Casino stocks were trading higher Tuesday, after
Las Vegas results fared better than the bloodletting that many expected and the company announces financing commitments for its newest project.
The entire gambling sector has been battered this year on fears that the economic slowdown is set to ravage profits at casino operators, especially those with a heavy focus in Las Vegas, such as MGM.
So far this year, results at MGM's Vegas casino are down but still manageable. Visitors continue to flock to the city but only at lower room rates. And once there, guests tend to be spending less.
In the second quarter, MGM's revenue per available room at its Las Vegas Strip casinos fell 5% from a year ago as rates fell, but occupancy remained high at 97% (off from 98% last year).
The company's Bellagio Casino -- which some consider Vegas' most luxurious destination -- reported its highest-ever quarterly hotel revenue.
Overall, the company's Vegas properties saw a 10% decrease in slots revenue and a 9% drop in property EBITDA.
About 85% of MGM's profits come from Vegas, as the company owns a large collection of properties on the Strip, including Mandalay Bay, the Mirage and MGM Grand.
The company also announced $1.65 billion in financing commitments from banks for its CityCenter development in Vegas. MGM is trying to land a $3 billion total package.
MGM's overall net income from continuing operations totaled $113 million, or 40 cents a share, compared with profit of $182.9 million, or 62 cents a share, a year ago.
Analysts expected earnings of 42 cents a share, according to Thomson Reuters.
Nonetheless, investors cheered the MGM report and sent shares up $2.77, or 8.9%, to $33.77 in recent trading Tuesday.
Lately, some investors have been saying casino stocks have
Fellow casino owners
Las Vegas Sands
were all up between 4% and 10%.