MGM Resorts (NYSE:MGM) is about to release its earnings. Ponder this Bear Case Scenario:
Will gaming and tourism rebound quickly to pre-recession levels. Probably not. Las Vegas has over capacity and occupancy rates will not be as attractive as they were a few year to go. It’s a long road ahead.
While MGM operating results have improved they are still leveraged and need to direct cash flow to pay down debt.
Asian gaming is far more profitable and larger. MGM is still very reliant on Las Vegas. Increases from Asia are slow.
George Gutowski writes from a caveat emptor perspective.