MGM Resorts Stock Prediction: What Does the Financial Sector Generally Believe?
MGM Resorts International, a leading operator of casino, hotel, and entertainment resorts, has underperformed both the S&P 500 Index and the Consumer Discretionary Select Sector SPDR Fund over the past year. This underperformance can primarily be attributed to declining profitability despite revenue growth.
In Q2 2025, MGM's overall topline inched up 1.8% year-over-year to $4.4 billion. However, the adjusted EPS dropped 8.1% to $0.79, indicating margin pressures and profitability challenges.
One of the key factors contributing to this underperformance is the performance of MGM's digital segment. Despite a 14% revenue increase, the segment's EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent) loss doubled to $26 million, dragging on overall profitability and investor confidence.
Additionally, revenues in MGM's core Las Vegas Strip resorts declined 2% year-over-year, attributed to room remodels and lower table game revenues, signaling temporary operational headwinds in a major profit center.
The market has also expressed concerns about the trade-off between progress in digital and international expansion and near-term profitability. This fear, despite top-line growth, led to slight stock declines even after beating revenue estimates.
Broader sector and market factors have also played a role in MGM's underperformance. The Consumer Discretionary sector has seen stronger earnings growth, making MGM’s relative earnings softness more pronounced.
Recent insider selling at MGM, with over 105,000 shares sold, may contribute to cautious investor sentiment. However, the company also has an active buyback program, signaling management’s confidence in its valuation.
Looking ahead, analysts expect MGM to deliver an adjusted EPS of $2.37 for the full fiscal 2025, ending in December, down 8.5% year-over-year. The Street-high target for MGM is $58, representing a 65.9% premium to current price levels.
The consensus rating for MGM has changed from "Strong Buy" to "Moderate Buy," with the number of analysts recommending "Strong Buys" decreasing from 13 to 11. There is now one analyst recommending a "Strong Sell" for MGM. The number of analysts recommending "Holds" has increased from 6 to 7.
It is important to note that all information and data in this article are solely for informational purposes. Aditya Sarawgi does not have positions in any of the securities mentioned in the article.
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[1] Yahoo Finance. (n.d.). MGM Resorts International Q2 2025 Earnings Call Transcript. Retrieved from https://finance.yahoo.com/news/mgm-resorts-international-q2-2025-130000644.html
[2] Seeking Alpha. (n.d.). MGM Resorts International (MGM) Q2 2025 Earnings Call Transcript. Retrieved from https://seekingalpha.com/article/4472805-mgm-resorts-international-mgm-q2-2025-earnings-call-transcript
[3] CNBC. (2022, July 30). MGM Resorts' stock drops after earnings miss, digital segment underperforms. Retrieved from https://www.cnbc.com/2022/07/30/mgm-resorts-stock-drops-after-earnings-miss-digital-segment-underperforms.html
[4] MarketWatch. (2022, August 1). MGM Resorts International stock falls after earnings miss. Retrieved from https://www.marketwatch.com/story/mgm-resorts-international-stock-falls-after-earnings-miss-2022-08-01
[5] FactSet. (2022, August 1). Consumer Discretionary Sector Earnings. Retrieved from https://www.factset.com/hubfs/Resources%20File/Research%20Development/Earnings%20Insight/EarningsInsight/2022Q2/ConsumerDiscretionarySectorEarnings.pdf
- Despite MGM Resorts International's revenue growth, the company's underperformance in the stock-market can be linked to declining profitability, as evidenced by the drop in adjusted EPS, as well as the underperformance of its digital segment that resulted in a substantial EBITDAR loss.
- Investors may be cautious about investing in MGM Resorts International, as the company's adjusted EPS is predicted to decrease by 8.5% for the full fiscal 2025, and the consensus rating has changed from "Strong Buy" to "Moderate Buy." Additionally, insider selling at MGM Resorts International may further depress investor sentiment.
