February 22, 2024
Top 10 Stock MGM Resorts Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: MGM Resorts – Top 10 Stock in S&P 500 Index
MGM Resorts is listed as a top 10 stock on February 22, 2024 in the market index S&P 500 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 83 (top 83% performer), Obermatt assesses an overall strong buy recommendation for MGM Resorts on February 22, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Casinos & Gaming |
| Index | Energy Efficient, Diversity USA, S&P US Luxury, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View MGM Resorts Strong Buy
| 360 METRICS | February 22, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 44 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 98 |
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| SENTIMENT | ||||||||
| SENTIMENT | 86 |
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| 360° VIEW | ||||||||
| 360° VIEW | 83 |
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ANALYSIS: With an Obermatt 360° View of 83 (better than 83% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock MGM Resorts are very positive. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for MGM Resorts. The consolidated Sentiment Rank has a good rank of 86, which means that professional investors are more optimistic about the stock than for 86% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 98 or better than 98% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 44, meaning that the share price of MGM Resorts is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 31. ...read more
RECOMMENDATION: With a consolidated 360° View of 83, MGM Resorts is better positioned than 83% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 86) and safe financing practices (Safety Rank of 98), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of MGM Resortṣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for MGM Resorts very positive
ANALYSIS: With an Obermatt Sentiment Rank of 86 (better than 86% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock MGM Resorts is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for MGM Resorts. Analyst Opinions are at a rank of 52 (better than 52% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 90, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in MGM Resorts. Finally, the Professional Investors rank is 72, which means that currently, professional investors hold more stock in this company than in 72% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 86 (more positive than 86% compared with investment alternatives), MGM Resorts has a reputation among professional investors that is significantly higher than that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 49, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 51% of competitors). This could mean future risks and should make investors careful. Attention to negative news for MGM Resorts is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: MGM Resorts Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 44 (worse than 56% compared with alternatives), MGM Resorts shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half are above average for MGM Resorts. Price-to-Sales (P/S) is 63, which means that the stock price compared with what market professionals expect for future sales is lower than for 63% of comparable companies, indicating a good value concerning MGM Resorts's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 56% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 1 (dividends are expected to be higher than for 1% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 64% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for MGM Resorts to 36. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 44, is a hold recommendation based on MGM Resorts's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner on assets than its competitors. For instance, the company could be leasing its production facilities, or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the low Dividend Yield is also explained as such companies tend to invest their income into market development. The other good value ranks for Sales and Profits are encouraging indicators for the stock price value. ...read more
Growth Strategy: MGM Resorts Growth Momentum low
| GROWTH METRICS | February 22, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 18 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 25 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 78 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 49 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 31 |
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ANALYSIS: With an Obermatt Growth Rank of 31 (better than 31% compared with alternatives), MGM Resorts shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for MGM Resorts. Only Capital Growth has a good rank of 78, which means that currently professionals expect the company to grow its invested capital more than 25% of its competitors. The other three indicators are pointing South: Sales Growth has a rank of 18 which means that currently professionals expect the company to grow less than 82% of its competitors. Profit Growth with a rank of 25 and Stock Returns with a rank of 49 are also low (below 51% of alternative investments). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 31, is a hold recommendation for growth and momentum investors. The good news from the invested capital side is surprising. A company with disappointing revenues, profits, and disappointed shareholders typically doesn't invest above average. Overall, the growth momentum for MGM Resorts is thus negative. As it is intriguing to see that company executives are optimistic about their investment policy, it is worthwhile looking into the details of the capital investment projects. They may indicate future growth and profits and thus if accompanied by a good value, a sign of good timing to invest in the stock. ...read more
Safety Strategy: MGM Resorts Debt Financing Safety very solid
| SAFETY METRICS | February 22, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 68 |
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| REFINANCING | ||||||||
| REFINANCING | 84 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 90 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 98 |
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ANALYSIS: With an Obermatt Safety Rank of 98 (better than 98% compared with alternatives) for 2024, the company MGM Resorts has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of MGM Resorts is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for MGM Resorts. Leverage is at 68, meaning the company has a below-average debt-to-equity ratio. It has less debt than 68% of its competitors. Refinancing is at a rank of 84, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 84% of its competitors. Finally, Liquidity is also good at a rank of 90, which means that the company generates more profit to service its debt than 90% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 98 (better than 98% compared with alternatives), MGM Resorts has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: MGM Resorts Above-Average Financial Performance
| COMBINED PERFORMANCE | February 22, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 44 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 90 |
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| COMBINED | ||||||||
| COMBINED | 70 |
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ANALYSIS: With an Obermatt Combined Rank of 70 (better than 70% compared with investment alternatives), MGM Resorts (Casinos & Gaming, USA) shares have above-average financial characteristics compared with similar stocks. Shares of MGM Resorts are low in value (priced high) with a consolidated Value Rank of 44 (worse than 56% of alternatives) and show below-average growth (Growth Rank of 31) but are safely financed (Safety Rank of 98), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 70, is a buy recommendation based on MGM Resorts's financial characteristics. As the company MGM Resorts's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 44) and low growth (Obermatt Growth Rank of 31), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 98) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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