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MGM Resorts International MGM

Morningstar Rating
$44.12 +1.24 (2.89%)
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Company Report

Sands, Wynn, MGM: Thailand's Progress Toward Gaming Is Not a Risk to Macao's Opportunity

Thailand moved closer to legalized gambling this month with the completion of a gaming draft bill, setting the stage for a law as soon as this year, based on reports of strong government support. We don’t believe the prospect of Thailand gaming resorts will have any material impact on demand for casinos in Macao, Singapore, or Japan for the foreseeable future. We are maintaining our fair value estimates of $61 for narrow-moat Las Vegas Sands, $122 for narrow-moat Wynn Resorts, and $55 for no-moat MGM Resorts. We rate all three as undervalued.

Price vs Fair Value

MGM is trading at a 20% discount.
Price
$44.12
Fair Value
$71.00
Uncertainty
High
1-Star Price
$66.15
5-Star Price
$98.00
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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News

Trading Information

Previous Close Price
$42.88
Day Range
$42.9644.45
52-Week Range
$34.1251.35
Bid/Ask
$43.74 / $44.10
Market Cap
$14.10 Bil
Volume/Avg
185 / 4.2 Mil

Key Statistics

Price/Earnings (Normalized)
16.16
Price/Sales
0.98
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
16.25%

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

Competitors

Valuation

Metric
MGM
CZR
WYNN
Price/Earnings (Normalized)
16.1697.5324.90
Price/Book Value
3.781.89
Price/Sales
0.980.751.71
Price/Cash Flow
6.234.608.95
Price/Earnings
MGM
CZR
WYNN

Financial Strength

Metric
MGM
CZR
WYNN
Quick Ratio
1.280.601.85
Current Ratio
1.570.761.93
Interest Coverage
4.200.971.15
Quick Ratio
MGM
CZR
WYNN

Profitability

Metric
MGM
CZR
WYNN
Return on Assets (Normalized)
1.88%3.43%3.39%
Return on Equity (Normalized)
18.62%27.28%
Return on Invested Capital (Normalized)
3.30%13.64%7.57%
Return on Assets
MGM
CZR
WYNN
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Resorts & Casinos Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
LVS
Las Vegas Sands CorpPwrjxqw$38.1 Bil
GXYYY
Galaxy Entertainment Group Ltd ADRCtpbwm$22.4 Bil
GXYEF
Galaxy Entertainment Group LtdDqznrv$22.4 Bil
SCHYF
Sands China Ltd Shs Unitary 144A/Reg SNgpclj$22.1 Bil
SCHYY
Sands China Ltd ADRPcfcsds$22.1 Bil
WYNN
Wynn Resorts LtdFchgt$11.1 Bil
CZR
Caesars Entertainment IncKktj$8.6 Bil
MLCO
Melco Resorts and Entertainment Ltd ADRBfnrfmr$3.1 Bil
PENN
PENN Entertainment IncNnvt$2.7 Bil

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