5. MGM Resorts International (NYSE:MGM)
Analysts’ Upside Potential: 40.69%
Number of Hedge Funds: 46
MGM Resorts International (NYSE:MGM) is one of the largest casino entertainment and hospitality companies. It operates around 18 properties in the United States and Macau, with significant development underway in Japan and Dubai. The company functions through Las Vegas Strip Resorts, Regional Operations, and MGM China. Its properties have gaming, hotels, dining, conventions, entertainment, retail, and other facilities.
The Las Vegas Strip is one of the most prominent gambling and casino locations. According to the Nevada Control Board, the Las Vegas Gross Gaming Revenue (GGR) has grown more than 4 times over the past 30 years. MGM Resorts International (NYSE:MGM) has benefited significantly from its operations at this location with its adjusted property EBTIDAR from Las Vegas growing 94% between 2019 and 2023. Considering the encouraging results, management on October 21 announced an agreement with Marriott International to launch W Las Vegas, which will be a new hotel on the Las Vegas Strip. W Las Vegas will be the 12th property included in the MGM Collection with Marriott Bonvoy, which allows Marriott’s vast member base to enjoy benefits at MGM Resorts locations.
Financially speaking, MGM Resorts International (NYSE:MGM) reported record consolidated net revenues for the third quarter of 2024, with significant contributions from its operations in MGM China. The consolidated net revenue of the company was $4.2 billion, an increase of 5% compared to the same quarter last year. MGM China grew its revenue by 14% to $929 million. The segment was positively affected by the lifting of COVID-19-related travel restrictions.
Meridian Hedged Equity Fund stated the following regarding MGM Resorts International (NYSE:MGM) in its Q3 2024 investor letter:
“MGM Resorts International (NYSE:MGM) is a global hospitality and entertainment company with a portfolio of destination casino resorts, primarily in Las Vegas, regional U.S. markets, and Macau. While MGM reported better-than-expected operating results in the quarter, driven by strength in both Las Vegas and Macau, its share price has been under pressure due to two main factors. First, BetMGM’s performance has lagged expectations, with ongoing losses and increased competition affecting investor sentiment toward the online gaming sector. Second, and perhaps of more immediate concern to the market, were management’s comments about softening early demand trends for the upcoming Formula One race in Las Vegas, raising concerns about potential weakness in the fourth quarter. While these factors contributed to volatility, we view them as likely short-term headwinds that do not materially impact our long-term investment thesis. As a result, we held our position steady in the period. We believe the company’s underlying fundamentals remain strong, and its assets provide an attractive fundamental floor value.”
