![]() We have a valuation of $47 per share for MGM, which is approximately 50% ahead of current market value. The company’s liquidity cushion also appears substantial, with cash and cash equivalents exceeding $2.7 billion in the most recent quarter. In addition, long-term debt is approximately 3.5x the company’s 2019 adjusted EBITDA. The company is also steadily reducing its debt, with long-term debt of just $10.5 billion last quarter, down from $15 billion in 2018. The company is also doing well in the growing online gambling and sports betting business with its BetMGM offering, and is looking to double down on the international market, recently offering to acquire Sweden’s LeoVegas. Last month, the company acquired Cosmopolitan of Las Vegas, a relatively high-end property, while recently agreeing to land its Gold Strike Tunica in Mississippi. MGM is also looking to streamline its operations through acquisitions and disinvestment. MGM gets less than 30% of its pre-pandemic revenue from Macau, versus peers Wynn Resorts WYNNĪnd Las Vegas Sands Which receives more than 60% of the sales from this sector. Furthermore, unlike rivals that bet bigger on the Macau operation, MGM has taken a more measured approach to the market, which has been characterized by the recent resurgence of COVID cases in China and uncertainty around the modalities of casino license expansions. Over Q1 2022, revenue from Last Vegas and regional operations grew 15% versus 2019 levels, with the number more than doubling from 2021 levels. MGM Resorts Revenue pre-pandemic) and the broader US gaming market as COVID-19-related concerns ease. The company has been one of the big beneficiaries of the solid recovery of the gaming business in the Las Vegas market (which accounts for over 45%). ![]() However, MGM’s performance in 2022 has been solid so far and there are indicators that the company will handle the slowdown well. Consumer confidence is also declining, as rising energy, grocery and housing prices eat into household budgets, and this could affect companies that rely on discretionary spending. The yield curve, also seen as a fairly reliable predictor of recessions, just turned upside down once again. It is causing the Federal Reserve to be more aggressive with raising its interest rates, raising 0.75 percent on Wednesday, the biggest since 1994, with similar hikes on the horizon. There are renewed concerns about the travel and leisure sector, as the US economy faces adverse conditions with inflation hitting a 41-year high. MGM Resorts Stock Having declined nearly 34% year-over-year, the S&P 500 underperformed, which is down about 21% over the same period.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |