First, the good news. Park MGM generated $9 million across the last three quarters, which is pretty good when you consider 
that it’s essentially a construction site. JP Morgan analyst Joseph Greff opines that this partly makes up for “weak” revenue per available room at MGM Resorts International properties on the Las Vegas Strip. “MGM is trading like a regional OpCo,” he added and I don’t think he meant it as a compliment. He lowered his cash-flow expectation for MGM by 15% for the rest of 2018 and 4% for next year. “While we can’t really defend the (surprising) magnitude of the 2H18 guide down as well as the timing of sizable share repurchases, both of which are testing our patience boundaries (and for the 2nd quarter in a row, too), we do see value at current levels amid looming easier year-over-year growth comparisons on the Strip,” he wrote.
What happened? “MGM is providing a 2H18 LV Strip outlook that is more negative than we and investors anticipated going into this morning’s print.” The company could use some major group bookings, maybe a boxing match or two. Absent that, “A softer citywide convention calendar is causing MGM and other 
operators to go after lower quality, lower spend guests to fill up mid-week.” As for the stock buybacks, Greff surmised that Strip trends came as a surprise to management. “Otherwise why would it buy back stock in front of this outlook when they would have to realize that they would get a better opportunity?”
In Macao, gross gaming revenues came in 21% below an estimated $200 million and it sounds like management is pinning its hopes on the opening of junket rooms at MGM Cotai in time for Golden Week. Only 500 of the 1,300 hotel rooms are ready at present and the Mansion Suites won’t be available to 4Q18. What is it about casino companies that addicts them to the deadly ‘soft opening’?
Over at Deutsche Bank, analyst Carlo Santarelli took a glass-half-full perspective: “We believe MGM shares, given the updated outlook, have been de-risked, to an extent.” Still, they 
need — among other things — strong performance from MGM Cotai and MGM Springfield, and “MGM will need to show that it can overcome Strip competition and generate reasonable ADR boosts.” The market has not been quite so patient, taking a $3.50/share chomp out of MGM’s price over two days. Noting that MGM has several irons in the fire, including Japan and sports betting, Santarelli was dismayed by avoirdupois in corporate expenses, which have ballooned from $330 million to $385 million.
Strip room revenues were up 3%, improving on Deutsche Bank’s +2% estimate, while non-gaming revenues fell 3% but gambling revenue leapt 12%. MGM Cotai did a face-plant, though, generating only $20 million of the $120 million in China cash flow. No theories were offered but MGM has to be pinning a lot of its hopes on those junket rooms and the VIPs who are expected to flock to them.
* The stock market punishes even those who do well. Just ask Scientific Games, down 13% yesterday “despite broadly in-line 
results” (Santarelli). Even with earnings outpacing the Wall Street consensus “pressure mounts for the James Bond launch to change the cadence.” Sales were up, the replacement cycle was strong (16% higher) and prospects for the OpenBet platform look good. It just goes to show that Wall Street doesn’t always make sense.
* Eldorado Resorts inched past Wall Street’s consensus on earnings, reporting $118 million in cash flow when the Street expected $115 million. Greff attributed the improved result to 
“cost management,” a catchall term that includes people losing their jobs as Eldorado consolidates the vast domains coming under its jurisdiction. “We continue to be impressed by ERI’s track record of reliably growing EBITDA (up 13% y/y in the 2Q) on relatively little revenue growth (flattish y/y), and note that while this has been a trend across the industry,” Greff wrote, “the company is still outpacing most of its peers here … EBITDA increased at 16 of 20 properties in the quarter, with 10 properties increasing at a double digit pace.”
It won’t hurt Eldorado that three of its jurisdictions — Pompano Park, Lake Charles and Shreveport — are going to be measured against 2017 results that were hurricane-impaired. Grand Victoria Elgin is expected to become Eldorado’s in 
August and the Tropicana Entertainment takeover should become final in 4Q18. Management said it was “supremely confident” it would achieve $58 million in synergies across the two acquisitions. Greff wrote that “we believe ERI has positioned itself for multiple years of meaningful EBITDA growth,” as the company brought in $457 million of second-quarter revenue (albeit below Street expectations of $462 million) and had “healthy regional gaming consumer and significant exposure to growth markets of Reno, Black Hawk, Columbus … and Pompano.” He thinks management is being conservative in its Tropicana cost-savings estimates and that Eldorado could realize $80 million in savings “given opportunity on the marketing side.”
