Is MGM Resorts Stock A Good Casino Industry Pick?

by Trefis Team
-17.03%
Downside
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Trefis
MGM
MGM Resorts International
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The shares of MGM Resorts (NYSE: MGM) have gained 2.4% in the past month as opposed to a decline observed by the peers’ Las Vegas Sands and Wynn Resorts. The broader casino industry turned bearish in recent weeks after Macau’s gaming regulator indicated increased regulatory oversight in its five-year development plan. While Sands and Wynn generate 64% and 40% of total revenues from Macau, respectively, MGM Resorts’ Macau exposure is also sizable at 23%. In 2019, MGM’s Macau operations contributed almost 23% of adjusted EBITDAR – making it an integral part of the company’s business portfolio. However, MGM Resorts has been pursuing the Japanese integrated resort opportunity along with the sports betting business in the U.S. to diversify. Does that make MGM Resorts a better pick over its peers? Considering MGM Resorts’ high exposure to Macau, Trefis believes that the stock price is stretched. We highlight MGM Resort’s stock performance with its peers in an interactive dashboard analysis, MGM Resorts Stock Chances of a Rise.

How have MGM Resorts peers performed in recent weeks?

In the past week, the shares of Las Vegas Sands, Wynn Resorts, and Penn National Gaming have observed a decline of 13%, 17%, and 7%, respectively. While Macau’s regulatory policy brought a sharp decline in the past week, a bearish trend has been observed in all casino stocks including the sports betting picks, such as Draft Kings and Penn National Gaming, primarily due to overall macroeconomic weakness. Interestingly, the shares of Penn National Gaming have gained 12.7% in the last 21 days despite the surge in coronavirus cases in the U.S. We highlight key aspects favoring an upside in Penn National Gaming stock in our earlier article, Odds In Favor Of Penn National Gaming Stock.

What are the chances of a rise in MGM Resorts’ stock?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, MGM Resorts stock has just 50.5% probability of positive return after observing a 3% rise in the past month (twenty-one trading days).

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