MGM: “FOR SALE” PROPERTIES OUTPERFORM

MGM's Q1 was likely good enough to keep the rally going.  We are not going to bore you with property by property revenue and EBITDA analysis.  We'll leave that to the 15 sell side analysts covering the name.

 

Similar to other gaming earnings reports, MGM's Q1 was light on revenues but heavy on cost cutting.  Margins were better than we projected.  We don't find that particularly interesting.  What we found interesting were the tremendous margins at MGM's non-core properties of MGM Detroit, Beau Rivage, and Monte Carlo.  Coincidentally or not, these three properties are also for sale.  MGM Detroit and Beau Rivage are officially on the block, while MGM appears to be in negotiations for the sale of Monte Carlo.

 

Check out the chart below.  These properties blew us away on EBITDA and it was all from margin.  Monte Carlo increased its margin by 2,460bps YoY and was 2,400bps above our estimate.  Can cost cutting alone explain 2,400bps of margin?

 

MGM: “FOR SALE” PROPERTIES OUTPERFORM - MGM for sale properties


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