Record Quarter for MGM Is No Mirage
Superb cash flows justify stock's premium valuation.
MGM's (MGG) acquisition of the Mirage is proving a success, helping the company today report record second-quarter cash flow of $199 million. Given continuing robust economic activity in the U.S. and rebounding Asian economies, the stock's outlook is positive.
MGM moved quickly to integrate the Mirage by rapidly cutting costs to improve operating performance and cash flow. After just two months, MGM cut $40 million of the projected $95 million in annual savings. By selling $135 million worth of art, it will save $16 million in annual interest and $6.8 million in annual leasing expenses, for a total savings of $23 million. It has also been aggressively cutting corporate overhead costs.
Richard Wilson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.