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Las Vegas, Nevada-based MGM Resorts International (MGM) owns and operates casino, hotel, and entertainment resorts. Valued at a market cap of $10.3 billion, the company's resort portfolio incorporates unique hotel offerings, including some of the most familiar resort brands in the industry, such as Bellagio, MGM Grand, Mandalay Bay, and The Mirage.
Companies worth $10 billion or more are generally described as “large-cap” stocks, and MGM Resorts fits right into that category. The hospitality company is known for its best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife, and retail offerings.
Despite its strengths, the company has dipped 28% from its 52-week high of $48.24, achieved on Apr. 1. Moreover, it has declined 7% over the past three months, significantly underperforming the broader Direxion Daily Travel & Vacation Bull 2X Shares’ (OOTO) 33.1% increase over the same time frame.
Moreover, in the longer term, MGM has declined 21.7% over the past 52 weeks, significantly underperforming OOTO’s 38.9% returns. Shares of MGM are down 18.2% over the past six months, massively lagging behind OOTO’s 38.6% gains over the same time frame.
To confirm its bearish trend, MGM has been trading below its 200-day and 50-day moving average since late October.
MGM’s shares crashed 11% following its Q3 earnings release on Oct. 30. The company’s revenue increased 5.3% year-over-year to $4.18 billion and slightly missed the consensus estimates. Moreover, its adjusted earnings of $0.54 per share declined 15.6% from the year-ago quarter and fell short of the forecasted figure of $0.58. A significant decrease in Las Vegas table games volume and lower-than-expected MGM’s Macau margins due to one-time costs and entertainment spend contributed to the company’s weaker-than-expected performance.
MGM’s underperformance looks even more pronounced when compared to its rival, Wynn Resorts, Limited (WYNN), which declined 2.2% over the past 52 weeks and gained 1% over the past six months.
Despite MGM’s recent underperformance relative to its industry peers, analysts remain strongly optimistic about its prospects. The stock has a consensus rating of “Strong Buy” from the 18 analysts covering it, and the mean price target of $50.37 suggests a notable 45% premium to its current levels.
