MGM: Beating Around The Bush On Guidance

MGM’s earnings report for Q212 was a largely negative story across the board. Our bearish stance on the company continues as worse-than-expected numbers hit several metrics at the company, which we’ve outlined below. The story here is bookings: basically, people aren’t booking hotel rooms as much as the industry would have hoped.



MGM: Beating Around The Bush On Guidance  - destroyedperf



Hedgeye Gaming Sector Head Todd Jordan broke down the bookings situation as follows:


•        The convention mix was a little worse than expected. While MGM predicted convention mix to increase YoY during 2Q [at least +1%], there was a patch of softness from May-June that led to a drop off in yearly convention bookings. MGM’s convention mix for 2012 is trending at about the 14-15% mix level (2011 mix was 14.7) which is below earlier predictions.

•         While MGM predicted RevPAR growth for the year to be at least mid-single digit, 3Q RevPAR will be down slightly with weakness in bookings in May/June. Our analysts think it’s too early to make a call on how 4Q will shake out.


Revenue per available room (RevPAR)is only going to get worse and this is one of the biggest factors out there for hotels. However, one very disconcerting comment that management mentioned on yesterday’s earnings call was its guidance for Q3: "We've already seen an improvement in customer trends here in the third quarter.”


Management’s statement seems contradictory. If one had been paying attention to the market today, they’d have noticed that (PCLN) and (OWW) were getting absolutely CRUSHED, down –17.2% and –25.5%, respectively. Why? Their management teams came out and noted that bookings and other metrics in the leisure space are way down.


And that is why we remain bearish on MGM.

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more