MGM Resorts operates 15 wholly owned resorts in the United States, MGM Macau resort and casino in China, as well as develops a gaming resort in Cotai, Macau. The company was founded in 1986 and is based in Las Vegas, Nevada.
MGM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for MGM Resorts International. To summarize, we found that MGM Resorts International ranked in the 34th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. As for the metrics that stood out in our discounted cash flow analysis of MGM Resorts International, consider:
The company's balance sheet shows it gets 28% of its capital from equity, and 72% of its capital from debt. Its equity weight surpasses that of just 19.6% of free cash flow generating stocks in the Consumer Cyclical sector.
The company's compound free cash flow growth rate over the past 5.48 years comes in at -0.04%; that's greater than only 23.02% of US stocks we're applying DCF forecasting to.
MGM Resorts International's weighted average cost of capital (WACC) is 5%; for context, that number is higher than only 0.75% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
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When we look at MGM Resorts (NYSE: MGM), its business is mostly operational across the U.S. today, but it'll be at the mercy of consumers and businesses and their appetite to spend money and take the inherent risks associated with going to indoor entertainment locations. MGM Resorts said that it would burn about $270 million per month while resorts were closed, and even after opening that may be a good proxy for cash outflows from its resorts. To pay for these expenses, MGM had $4.6 billion of cash on the MGM balance sheet (excluding MGM Growth Properties and MGM China) when first-quarter results were announced, and $1.4 billion of redeemable partnership units in MGP.
Hong Kong's highest-profile officials and business people paid their respects on Friday to Macau's gambling king, Stanley Ho, who built a business empire from scratch in the former Portuguese colony and became one of Asia's richest men. Ho, who died at age 98 on May 26, presided over the transformation of once-sleepy Macau into the world's biggest casino centre, outpacing the United States' Las Vegas strip. Shielded from challengers by a four-decade monopoly on gambling, Ho grew his operations into one of the world's most lucrative gaming businesses through his flagship firm SJM Holdings, valued at about $6 billion.