MGM Resorts International (MGM): A Bull Case Theory

We came across a bullish thesis on MGM Resorts International (MGM) on Substack by Stock Analysis Compilation. In this article, we will summarize the bulls’ thesis on MGM. MGM Resorts International (MGM)’s share was trading at $34.29 as of Dec 23^rd. MGM’s trailing and forward P/E were 12.29 and 13.37 respectively according to Yahoo Finance.

MGM presents a compelling value play driven by strong free cash flow, robust fundamentals, and significant exposure to the growing online gambling sector. As a leading owner and operator of casinos, MGM’s portfolio spans Las Vegas, regional U.S. locations, and Macau, where it holds a ~56% stake in MGM China. The company also capitalizes on the metaverse’s potential through BetMGM, its 50% joint venture with Entain, which focuses on iGaming and sports gambling.

With a high-teens return on equity and substantial free cash flow, MGM reinvests in its business and executes aggressive stock buybacks, enhancing shareholder value. Despite delivering healthy performance in Las Vegas and Macau, the company has faced temporary headwinds, including losses at BetMGM and macroeconomic concerns related to China’s recovery. However, these issues are expected to subside, positioning MGM to benefit from strong long-term growth trends in online gambling.

At approximately 13x forward earnings, MGM’s stock appears attractively priced, reflecting a disconnect between its fundamentals and growth potential. The ongoing transition in global gambling preferences toward digital platforms further bolsters MGM’s investment case, offering a promising outlook with substantial upside for both equity and long-term investors seeking growth at a reasonable valuation.

MGM Resorts International (MGM) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held MGM at the end of the third quarter which was 44 in the previous quarter. While we acknowledge the risk and potential of MGM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MGM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.