MGM Resorts International (MGM): Should You Wager on this Casino Resort Company?

Conventions in Las Vegas Sands Corp. (NYSE:LVS) had slowed after the financial crisis of 2008 and 2009. Many companies were cutting costs at a substantial rate at the time, and the popular theory was that employees shouldn’t be exposed to temptations while working. This theory made sense, and it’s likely to return one day. For now, the convention business is healthy in Las Vegas, and according to Jim Murren, it will pick up even more in 2014. This would be a major plus for MGM.

MGM vs. peers

On a comparative basis, Wynn Resorts, Limited (NASDAQ:WYNN) impressed the most for debt management. But what about valuation and dividend yield?

Forward P/E Dividend Yield
MGM 137 No Yield
Las Vegas Sands 17 2.50%
Wynn 19 3.00%

MGM is trading at 137 times forward earnings. This indicates that expectations are much higher for MGM than they are for peers. MGM also falls short in yield.


MGM Resorts International (NYSE:MGM) is a good indicator of consumer discretionary income. Considering that MGM’s top-line growth has been good, plenty of people out there are making money. This is good news for Las Vegas.

However, this performance likely relates to stock market and housing market gains. Since this isn’t a jobs-based recovery, it’s not a natural recovery. Therefore, nobody can predict the longevity of the current run in stocks and real estate. If interest rates increase and speculation finally comes to a halt, then MGM, Las Vegas Sands, and Wynn Resorts, Limited (NASDAQ:WYNN) would all be dangerous investments.

For those who want to play the rally, you might want to consider the highest yield and best debt management with Wynn.

The article Should You Wager on this Casino Resort Company? originally appeared on and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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