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Las Vegas-based MGM Resorts International (MGM) owns and operates casino, hotel, and entertainment resorts in the United States and internationally. With a market cap of $11.7 billion, MGM Resorts operates through Las Vegas Strip Resorts, Regional Operations, and MGM China segments.
Companies worth $10 billion or more are generally described as "large-cap stocks," MGM Resorts fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the resorts & casinos industry. Its offerings include gaming, hotel, convention, dining, retail, entertainment, and more.
MGM Resorts touched its 52-week high of $48.24 on Apr. 1 and is now trading 22.7% below that peak. MGM has dipped 10.5% over the past three months, substantially lagging behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 8.6% gains during the same time frame.
Over the longer term, MGM has declined 16.5% on a YTD basis and 3.8% over the past 52 weeks, underperforming XLY’s 10% gains in 2024 and 17.7% returns over the past year.
To confirm the bearish trend, MGM has been trading below its 50-day and 200-day moving averages since the start of August.
Despite delivering better-than-expected results, shares of MGM Resorts plummeted 13.2% after the release of its Q2 earnings. The company reported a 9.8% year-over-year revenue growth, amounting to $4.3 billion. However, escalating expenses led to a 77-basis-point contraction in net margins to 4.3%, raising concerns about operational efficiency. This margin compression resulted in a 6.8% decline in net income to shareholders, dropping to $187.1 million compared to the year-ago quarter.
On a positive note, its adjusted EPS surged from $0.59 in the year-ago quarter to $0.86, surpassing consensus estimates by 30.3%, primarily driven by share buybacks.
MGM Resorts’ competitor, Las Vegas Sands Corp. (LVS), has declined 12.4% over the past year, underperforming MGM’s single-digit dip over the same time frame. However, in 2024, LVS dipped 14.7%, slightly outperforming MGM on a YTD basis.
Among the 18 analysts covering the MGM stock, the consensus rating is a “Strong Buy.” The mean price target of $54.21 represents a potential upside of 45.3% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
