Despite a positive update from BetMGM and aggressive stock buybacks, MGM Resorts stock (NYSE: MGM) appears to be a value trap rather than a value opportunity. MGM stock has seen a slight decline year-to-date, while the S&P 500 has increased by approximately 3%. There is evident momentum in online gaming, an exciting new casino development approaching in Japan, and—most importantly—a new $2 billion stock buyback approved by management just last week.
On Monday, MGM shares jumped by over 8% following encouraging news from BetMGM, its equal joint venture with Entain. The sports betting and iGaming enterprise raised its revenue projection for 2025 to at least $2.6 billion, an increase from its previous estimate of $2.4–$2.5 billion, with EBITDA now anticipated to be no less than $100 million. This represents a significant improvement from the previously ambiguous commitment to achieve “EBITDA positive.” The announcement positively impacted competitors as well, with Wynn stock (NASDAQ: WYNN) and Las Vegas Sands stock (NYSE: LVS) both rising about 5%.
Yet MGM stock continues to be sidelined for a reason.
Even with a low price of approximately $34 per share, the stock still appears unappealing. Our analysis indicates that MGM exhibits significant challenges in profitability, financial robustness, and resilience to economic downturns. These weaknesses undermine its attractive valuation metrics and strong recent growth. However, if you are looking for gains with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and producing returns exceeding 91% since its launch.
How Does MGM Resorts International’s Valuation Compare to The S&P 500?
When considering your expenditure per dollar of sales or profit, MGM stock appears inexpensive relative to the wider market.
• MGM Resorts International has a price-to-sales (P/S) ratio of 0.5 in comparison to a figure of 3.1 for the S&P 500
• Furthermore, the company’s price-to-free cash flow (P/FCF) ratio is 7.8 versus 20.9 for the S&P 500
• Additionally, it holds a price-to-earnings (P/E) ratio of 15.4 against the benchmark’s 26.9
How Have MGM Resorts International’s Revenues Evolved Over Recent Years?
MGM Resorts International’s Revenues have exhibited noteworthy growth in past years.
• MGM Resorts International has averaged a growth rate of 21.8% in its top line over the last 3 years (comparing to a 5.5% increase for the S&P 500)
• Its revenues have increased by 6.7% from $16 Bil to $17 Bil over the last 12 months (in comparison to growth of 5.5% for the S&P 500)
• Moreover, its quarterly revenues fell 0.7% to $4.3 Bil in the latest quarter from $4.4 Bil a year prior (contrasted with a 4.8% enhancement for the S&P 500)
How profitable is MGM?
MGM Resorts International’s profit margins are significantly lower than most firms within the Trefis coverage universe.
• MGM Resorts International’s Operating Income for the past four quarters was $1.7 Bil, reflecting a low Operating Margin of 9.7%
• MGM Resorts International’s Operating Cash Flow (OCF) for that period amounted to $2.4 Bil, indicating a low OCF Margin of 13.7% (compared to 14.9% for the S&P 500)
• For the past four-quarter period, MGM Resorts International’s Net Income stood at $747 Mil – suggesting a low Net Income Margin of 4.3% (against 11.6% for the S&P 500)
Does MGM appear financially stable?
MGM Resorts International’s balance sheet seems fragile.
• MGM Resorts International’s Debt level was $32 Bil by the conclusion of the latest quarter, while its market capitalization is $9.8 Bil (as of 6/16/2025). This translates to a very poor Debt-to-Equity Ratio of 335.0% (comparatively, 19.4% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $2.3 Bil of the $42 Bil in Total Assets for MGM Resorts International. This results in a moderate Cash-to-Assets Ratio of 5.7%
How resilient is MGM stock during a downturn?
MGM stock has performed significantly worse than the S&P 500 index during several recent downturns. While investors are hopeful for a soft landing of the U.S. economy, what are the potential risks if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
Inflation Shock (2022)
• MGM stock dropped 46.1% from a peak of $50.37 on 5 November 2021 to $27.17 on 23 June 2022, compared to a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully rebounded to its pre-Crisis peak by 28 July 2023
• Since that time, the stock has climbed to a high of $50.90 on 30 July 2023 and currently trades near $34
Covid Pandemic (2020)
• MGM stock decreased 79.3% from a high of $34.54 on 17 January 2020 to $7.14 on 18 March 2020, while the S&P 500 experienced a peak-to-trough decline of 33.9%
• The stock completely regained its pre-Crisis peak by 8 February 2021
Global Financial Crisis (2008)
• MGM stock decreased 98.1% from a peak of $99.75 on 9 October 2007 to $1.89 on 5 March 2009, whereas the S&P 500 faced a peak-to-trough decline of 56.8%
• The stock is still yet to return to its pre-Crisis high
Summarizing the situation: What it signifies for MGM stock
In conclusion, MGM Resorts International’s performance across the discussed parameters is summarized as follows:
• Growth: Very Strong
• Profitability: Very Weak
• Financial Stability: Very Weak
• Downturn Resilience: Extremely Weak
• Overall: Weak
Considering the factors mentioned above and keeping in view the company’s extremely low valuation, we find the stock to be unattractive. Although BetMGM’s potential and the Japan expansion present long-term prospects, the immediate risks outweigh the benefits at current valuations.
While it is advisable to steer clear of MGM stock for the time being, you might consider exploring the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stock benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) delivering substantial returns for investors. What accounts for this? The quarterly rebalanced mixture of large, mid-, and small-cap RV Portfolio stocks has provided a responsive strategy to maximize gains during favorable market conditions while minimizing losses during downturns, as outlined in RV Portfolio performance metrics.
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