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MGM: Buy On The Dip Despite Lingering Negative Sentiment
MGMMGM Resorts International(MGM) Seeking Alpha·2024-08-09 14:50

Core Viewpoint - MGM is currently undervalued in the market despite its strong fundamentals and global presence, with a significant debt load of 31.3billionbeingaprimaryconcernforinvestors[1][4][7].FinancialPerformance−MGM′stotalrevenuefor2023isprojectedat31.3 billion being a primary concern for investors [1][4][7]. Financial Performance - MGM's total revenue for 2023 is projected at 16.16 billion, up from 12.87billionin2019,withaforecastof12.87 billion in 2019, with a forecast of 16.67 billion for 2024 [8]. - The company has a current ratio of 1.57, indicating reasonable short-term financial health [1][7]. - Long-term debt, including capital net leases, stands at 31.3billion,withadebt−to−equityratioof1.8[7].MarketPositionandStrategy−MGMhasastrongpresenceintheU.S.casinomarket,particularlyontheVegasStrip,andisexpandingitsfootprintinternationally,includingMacauandJapan[1][6].−Thecompanyoperatesthethird−largestsportsbettingplatformintheU.S.,BetMGM,whichisnowprofitable[8].−MGM′sstrategyincludespartnershipsandacquisitions,suchastheacquisitionofScandinaviansportsbettingplatformLeoVegasfor31.3 billion, with a debt-to-equity ratio of 1.8 [7]. Market Position and Strategy - MGM has a strong presence in the U.S. casino market, particularly on the Vegas Strip, and is expanding its footprint internationally, including Macau and Japan [1][6]. - The company operates the third-largest sports betting platform in the U.S., BetMGM, which is now profitable [8]. - MGM's strategy includes partnerships and acquisitions, such as the acquisition of Scandinavian sports betting platform LeoVegas for 607 million [4][6]. Management and Leadership - The leadership of CEO Bill Hornbuckle, who has a solid background in the gaming industry, is viewed positively, contributing to the company's resilience during crises [3][4]. - Recent management purchases of 210,000 shares indicate confidence in the company's future [6]. Analyst Sentiment and Valuation - Analyst consensus price targets for MGM range from 56to56 to 66, with some valuations suggesting it is 43% undervalued [8]. - The company is seen as a "sleeping giant" in the sector, with potential for significant price appreciation as market sentiment shifts [8].