MGM Resorts International (MGM)’s Potential: Should You Invest?


A big overhang for MGM’s stock price has been that the company has been losing money. All of this changed with the latest earnings report. Analysts had been forecasting the company to lose $0.10 per share, but instead, the company reported a profit of $0.03. Things are starting to turn around for MGM Resorts International (NYSE:MGM).

Competitors

Comparing MGM with Caesars Entertainment Corp (NASDAQ:CZR) and Las Vegas Sands Corp. (NYSE:LVS), we see:


MGM

Caesars

Las Vegas Sands

Market Cap

$7.76 billion

$2.09 billion

$48.97

Revenue

$8.87 billion

$8.52 billion

$11.67 billion

EBITDA

$1.82 billion

$1.77 billion

$3.50 billion

Net Income

$-1.54 billion

$-1.28 billion

$1.60 billion

Price/Sales

0.87

0.24

4.14

Employees

50,050

68,000

46,00


Foolish assessment

In comparing these companies, MGM is the best investment. Caesars Entertainment Corp (NASDAQ:CZR) doesn’t have a presence in Macau like MGM. Caesars Entertainment Corp (NASDAQ:CZR) is a turnaround play on the U.S. market only. MGM offers both Macau and a turnaround in the U.S. gaming market. Las Vegas Sands Corp. (NYSE:LVS) is fully valued. Las Vegas Sands Corp. (NYSE:LVS) has been a great performer, with its primary business coming from Singapore and Macau. MGM has more upside potential and represents greater value because of its U.S. operations.

I see MGM as an undervalued situation with plenty of upside for investors as the U.S. economy continues to recover. With a second resort in development in Macau, I see that business growing as well, which will add further upside potential for MGM shares. Three
billionaires are currently invested in MGM Resorts International (NYSE:MGM) stock. Kirk Kerkorian has the largest stake with over 91 million shares, followed by John Paulson with over 37 million shares, and David Tepper with over six million shares. Investors should follow these billionaires in owning MGM Resorts and bank on a turnaround.

The article MGM Resorts Offers Most Upside Among Casino Stocks originally appeared on Fool.com and is written by Mark Yagalla.

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