BetMGM Is Booming, So Why Isn’t MGM Stock Worth Buying?
Despite a bullish BetMGM update and aggressive buybacks, MGM Resorts stock (NYSE: MGM) looks like a value trap, not a value play. MGM stock is down modestly year-to-date, as the S&P 500 has risen about 3%. There’s momentum in online gaming, a splashy new casino on the horizon in Japan, and—most telling of all—a fresh $2 billion stock buyback authorized by management just last week.
On Monday, MGM shares surged over 8% on upbeat news from BetMGM, its 50/50 joint venture with Entain. The sports betting and iGaming operator lifted its 2025 revenue forecast to at least $2.6 billion, up from prior guidance of $2.4–$2.5 billion, with EBITDA now expected to come in at no less than $100 million. That’s a meaningful improvement from the previously vague promise to be “EBITDA positive.” The news lifted rivals too, with Wynn stock (NASDAQ: WYNN) and Las Vegas Sands stock (NYSE: LVS) both gaining around 5%.
Yet MGM stock remains in the penalty box for a reason.
Despite its low price, about $34 per share, the stock still looks unattractive. Our analysis shows that MGM has glaring issues in profitability, financial health, and resilience to downturns. These weaknesses undercut its compelling valuation metrics and strong recent growth. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How Does MGM Resorts International’s Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, MGM stock looks cheap compared to the broader market.
• MGM Resorts International has a price-to-sales (P/S) ratio of 0.5 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 7.8 compared to 20.9 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 15.4 vs. the benchmark’s 26.9
How Have MGM Resorts International’s Revenues Grown Over Recent Years?
MGM Resorts International’s Revenues have seen notable growth over recent years.
• MGM Resorts International has seen its top line grow at an average rate of 21.8% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 6.7% from $16 Bil to $17 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues declined 0.7% to $4.3 Bil in the most recent quarter from $4.4 Bil a year ago (vs. 4.8% improvement for S&P 500)
How profitable is MGM?
MGM Resorts International’s profit margins are much worse than most companies in the Trefis coverage universe.
• MGM Resorts International’s Operating Income over the last four quarters was $1.7 Bil, which represents a poor Operating Margin of 9.7%
• MGM Resorts International’s Operating Cash Flow (OCF) over this period was $2.4 Bil, pointing to a poor OCF Margin of 13.7% (vs. 14.9% for S&P 500)
• For the last four-quarter period, MGM Resorts International’s Net Income was $747 Mil – indicating a poor Net Income Margin of 4.3% (vs. 11.6% for S&P 500)
Does MGM look financially stable?
MGM Resorts International’s balance sheet looks weak.
• MGM Resorts International’s Debt figure was $32 Bil at the end of the most recent quarter, while its market capitalization is $9.8 Bil (as of 6/16/2025). This implies a very poor Debt-to-Equity Ratio of 335.0% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $2.3 Bil of the $42 Bil in Total Assets for MGM Resorts International. This yields a moderate Cash-to-Assets Ratio of 5.7%
How resilient is MGM stock during a downturn?
MGM stock has fared much worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• MGM stock fell 46.1% from a high of $50.37 on 5 November 2021 to $27.17 on 23 June 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 28 July 2023
• Since then, the stock has increased to a high of $50.90 on 30 July 2023 and currently trades at around $34
Covid Pandemic (2020)
• MGM stock fell 79.3% from a high of $34.54 on 17 January 2020 to $7.14 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 8 February 2021
Global Financial Crisis (2008)
• MGM stock fell 98.1% from a high of $99.75 on 9 October 2007 to $1.89 on 5 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
Putting all the pieces together: What it means for MGM stock
In summary, MGM Resorts International’s performance across the parameters detailed above are as follows:
• Growth: Very Strong
• Profitability: Very Weak
• Financial Stability: Very Weak
• Downturn Resilience: Extremely Weak
• Overall: Weak
Based on the above parameters and keeping in mind the company’s very low valuation, we think that the stock is unattractive. While BetMGM’s upside and the Japan expansion offer long-term potential, the near-term risks outweigh the reward at current levels.
While you would do well to avoid MGM stock for now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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