Does the House Always Win? Viewer Takes on Diverging Insights Among CZR & MGM

When analyzing Q3 earnings calls in Viewer, Caesars (CZR) and MGM Resorts (MGM) showed sharply disparate trends, with CZR registering an Amenity Score of negative 7, down from 33 last quarter while MGM registered an Amenity Score of 37, up from negative 9 the prior quarter.

At Amenity Analytics, we believe the Amenity Score is just the starting point of differentiated analysis, leveraging the Viewer to identify the why behind the trends in a matter of a few clicks. We explore the sentiment behind CZR and MGM to share 3 insights.

Please note: This in no way represents investment advice. All transcript text provided by S&P Global Market Intelligence.

Company View: Caesar's (CZR)

Company View MGM Resorts (MGM)

1. Las Vegas as a Market Was Soft in Q3, but MGM Outperformed its Plan While CZR Lagged Expectations

  • MGM

"While our Las Vegas Strip RevPAR was down year-over-year, it was ahead of our guidance, and we still achieved our second best third quarter RevPAR on record."

  • CZR

"Demand inLas Vegas was softer than we anticipated based on our pace in the quarter and historical trends and dropped sharply in the back half of September."

2. Overall Forward-Looking Commentary Remains Quite Positive

Guidance Trend Q2 vs Q3

"...we anticipate our Las Vegas Strip RevPAR will be up 1 to 2% and overall revenues will be up slightly. We also expect our Las Vegas margins to be flat to up slightly as well."

"...we expect MGM's Group room nights to be up again, and we expect to gain market share, driven by the expansion of MGM Grand's convention space and, of course, Park MGM."

"We expect moderate revenue growth to our continuous improvement efforts and an ongoing disciplined approach to both top line and cost control that we believe will drive margin improvement."

"...by ramping up our newly opened properties like MGM Cotai, MGM Springfield, Park MGM, we expect to accelerate cash flow and free cash flow."

Guidance Trend Q2 vs Q3

"We still expect a strong fourth quarter."

"I think that the only thing that for us was a surprise was the precipitous drop that we saw in September, but everything that we've seen since then has been pretty much a return to normalcy. So in terms of looking at the Vegas business model going forward, we remain bullish."

"We're also filling more rooms with casino customers early in the booking window, which will improve gaming revenues and hedge against any potential volatility in late booking and leisure demand."

"We expect positive ADR growth in Las Vegas (in 2019)."

3. CZR's Struggles in Atlantic City is Not Shared by MGM

  • MGM

"As I said, we really like our assets. It's not lost on us that we have the most profitable assets in every regional market, in Mississippi, in Michigan, in New Jersey, and of course, the largest profit generator here in Nevada."

  • CZR

"...we were impacted by increased competition in Atlantic City in the quarter."

"Enterprise-wide adjusted EBITDAR of $600 million declined 2.1% driven by softness in Las Vegas as well as a drag from Atlantic City."

"The impact in Atlantic City due to higher competition negatively impacted hold-adjusted EBITDAR by approximately $20 million versus 1 year ago."

"...we will try our best to offset a lot of the revenue declines that we're seeing and reduce expenses where we can, but the reality is that the 2 new operators entering the market in a period of low demand due to the time of year, it makes operating fixed cost businesses very challenging."

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Transcript text provided by S&P Global Market Intelligence. Copyright ©2018. All rights reserved.