Last week was eventful for MGM Resorts International (NYSE:MGM), one of the prominent casino operators globally. On June 15, it entered into an agreement with Peterson Companies for the construction of a casino at National Harbor, Maryland. National Harbor is a premier waterfront destination that houses fine restaurants, convention centers, retail and office spaces.
MGM’s CEO James Murren believes that the newly proposed casino would attract residents from Virginia and Washington D.C. The casino is located at close proximity to Washington D.C. and will be a source of attraction for 40 million visitors who visit the capital each year.  MGM’s proposed integrated resort would include approximately 4,000 video terminal machines and 250 table games together with hotel and retail, and restaurant & entertainment avenues.
We believe it is too early to comment on the future success of MGM’s integrated resort in attracting customers from nearby states. At present, there are five approved casinos in Maryland that feature only slot machines including Harrah’s Baltimore and Maryland Live. MGM lacks geographical diversification unlike rivals Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) as most of its resorts are located in the U.S. MGM has, however, started focusing on strengthening its presence in Asia.
MGM’s stock price has witnessed a consistent decline since it posted a $217.3 million loss in Q1 2012 compared to $89.9 million loss in Q1 2011. A lower-than-normal table games hold percentage and repayment of debt impacted its earnings for the quarter. The stock price declined by about 3% since past week.
We have a Trefis price estimate of $11.10 for MGM, which is in-line with the current market price.