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MGM Resorts International MGM

Morningstar Rating
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Stock XNYS Rating as of
$42.03 −0.67 (1.57%)
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As of Delayed Price Pre-Open: $41.93 −0.10
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Company Report

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DraftKings, Penn, MGM, Caesars: Sports Betting Share Dynamics Clearer Amid Recent Competition

Dan Wasiolek

Pennsylvania and Michigan released sports wagering and revenue data through February, including individual operator performance. The data supports our view that no-moat Penn is grabbing share at the hands of no-moat peers MGM and Caesars, while no-moat DraftKings adds to its leading position due to first mover and technology advantages. In fact, since launching ESPNBet in November, Penn has averaged a 4- and 7-percentage-point sports revenue share improvement over the prior year in Pennsylvania and Michigan, respectively, reaching a high-single-digit share of both markets and aligning with our forecast. Meanwhile, MGM’s share over the same time is lower by 3 and 5 percentage points; Caesars’ is flat and down 3 percentage points; and smaller competitors are collectively lower by 3 and 3 percentage points. Conversely, DraftKings’ share is up 7 and 11 percentage points.

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Price vs Fair Value

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MGM is trading at a 24% discount.
Price
$42.03
Fair Value
$29.00
Uncertainty
High
1-Star Price
$61.29
5-Star Price
$18.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

MGM was awarded the only urban Japanese gaming concession due to its strong experience operating leading resorts in Las Vegas and its successful record of working with partners.

Bears

The majority of cash flow for MGM comes from the Las Vegas region, which has lower regulatory barriers, margins, and ROICs than Macao.

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Trading Information

Previous Close Price
$42.70
Day Range
$42.02–43.05
52-Week Range
$34.12–51.35
Bid/Ask
$41.70 / $43.09
Market Cap
$13.32 Bil
Volume/Avg
1,020 / 3.8 Mil

Key Statistics

Price/Earnings (Normalized)
15.64
Price/Sales
0.95
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
17.20%

Company Profile

MGM Resorts is the largest resort operator on the Las Vegas Strip with 35,000 guest rooms and suites, representing about one fourth of all units in the market. The company's Vegas properties include MGM Grand, Mandalay Bay, Park MGM, Luxor, New York-New York, and Bellagio. The Strip contributed approximately 62% of total EBITDAR in 2023. MGM also owns U.S. regional assets, which represented low-20s of 2023 EBITDAR (MGM's Macao EBITDAR was 17% of the total in 2023). MGM's U.S. sports and iGaming operations are currently a high-single-digit percentage of its total revenue. The company also operates the 56%-owned MGM China casinos with a new property that opened on the Cotai Strip in early 2018. Further, we estimate MGM will open a resort in Japan in 2030.
Sector
Consumer Cyclical
Industry
Resorts & Casinos
Stock Style Box
Mid Core
Total Number of Employees
63,000
Website
https://www.mgmresorts.com

Competitors

Valuation

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Metric
MGM
CZR
DKNG
Price/Earnings (Normalized)
 15.6494.32—
Price/Book Value
 3.661.8323.74
Price/Sales
 0.950.725.33
Price/Cash Flow
 6.034.45—
Price/Earnings
MGM
CZR
DKNG

Financial Strength

Metric
MGM
CZR
DKNG
Quick Ratio
 1.280.601.05
Current Ratio
 1.570.761.34
Interest Coverage
 4.200.97−316.16
Quick Ratio
MGM
CZR
DKNG

Profitability

Metric
MGM
CZR
DKNG
Return on Assets (Normalized)
 1.88%3.43%−11.51%
Return on Equity (Normalized)
 18.62%27.28%−44.18%
Return on Invested Capital (Normalized)
 3.30%13.64%−20.84%
Return on Assets
MGM
CZR
DKNG
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Resorts & Casinos Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
LVS
Las Vegas Sands CorpQqylknwvnCygjnq$37.4 Bil
SCHYF
Sands China Ltd Shs Unitary 144A/Reg S—Wmftbm$19.7 Bil
SCHYY
Sands China Ltd ADR—Xfjbwx$19.7 Bil
GXYYY
Galaxy Entertainment Group Ltd ADR—Rqjckq$19.1 Bil
GXYEF
Galaxy Entertainment Group Ltd—Jqmcwp$19.1 Bil
WYNN
Wynn Resorts LtdKpdthvdmxPdlfy$10.9 Bil
CZR
Caesars Entertainment IncJxlrcwsczRryf$8.3 Bil
MLCO
Melco Resorts and Entertainment Ltd ADRDvcxvcmxWytsxk$2.8 Bil
PENN
PENN Entertainment IncQbmlzzmwRyr$2.5 Bil

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