NEW YORK (TheStreet) -- MGM Resorts (MGM) - Get MGM Resorts International (MGM) Report stock is retreating by 2.60% to $19.12 in early afternoon trading on Wednesday, after Deutsche Bank analyst Karen Tang said Macau's average daily gaming revenue fell by 19% last week.
Gaming revenue decreased to 493 million Macau patacas, or $62 million, per day last week, which is 18% lower than the quarter's average so far, Tang wrote in a note today, Bloomberg reports.
An alleged theft at a junket with VIP rooms at Wynn Resorts (WYNN) in Macau prompted junket operators to lower their lending, which Tang said "prompted others to withdraw deposits from various junkets," according to Bloomberg.
Junkets are an informal and mostly unregulated financial system whose operators recruit gamblers, lend them money for betting and handle any debt collection, according to The Wall Street Journal.
Many stocks within the gaming industry closed down in Hong Kong on Wednesday, and the Bloomberg Intelligence Macau Gaming Index dropped more than 5% to a three-year low, Bloomberg noted.
Additionally, Fitch Ratings lowered its 2015 growth forecast for Macau gaming revenue to between 33% and 34% in 2015 from its previously estimated 29% decline.
Based in Las Vegas, MGM Resorts owns and operates casino resorts.
Separately, 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. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 38.96% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 4.08% trails the industry average.
- MGM RESORTS INTERNATIONAL's earnings per share declined by 22.7% 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 continued to lose money by earning -$0.32 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus -$0.32).
- MGM, with its decline in revenue, slightly underperformed the industry average of 4.1%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $271.62 million or 47.03% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
- You can view the full analysis from the report here: MGM