Asian Demand And Digital Integration Will Transform Resorts

Key Takeaways

• Strategic partnerships, digital innovation, and global expansion are set to accelerate MGM's top-line growth, margin gains, and customer acquisition across multiple channels and regions.
  
• Luxury positioning, technology-driven efficiencies, and international diversification will enhance market share, cash flow stability, and long-term earnings potential.
  
• Heavy dependence on Las Vegas and high capital spending exposes MGM to competitive, regulatory, and cost pressures, threatening margins and long-term profit stability despite digital growth.

Catalysts

Through its subsidiaries, operates as a gaming and entertainment company in the United States, China, and internationally.

• While analyst consensus views the Marriott partnership as driving a 31% annual increase in room nights and higher-spending guests, this likely underestimates the compounding effect from cross-selling and convention demand, where Marriott's global sales force and rising U.S. and international travel could accelerate both occupancy and revenue per room, resulting in outsized top-line and margin gains for multiple years.
  
• Analysts broadly expect steady digital and omnichannel gains from BetMGM and loyalty, but these advantages are poised for exponential step-changes as the company's proprietary digital products, global content, and single-wallet integration leverage MGM's unique ability to convert in-property guests and digital players at scale, creating a flywheel effect for customer acquisition and long-term revenue streams.
  
• MGM's luxury and premium mass positioning-amplified by expanded villas, high-limit gaming spaces, and its location adjacent to major new sports/entertainment venues-sets the stage for above-market share gains in VIP and affluent customer segments as the global middle class grows and demand for premium experiences accelerates, disproportionately benefitting both revenue growth and EBITDA margins.
  
• The robust international pipeline-including Japan, Dubai, and Brazil-provides MGM with a rare, multi-continent growth engine, where first-mover advantage and favorable regulatory/licenses are likely to unlock multi-billion dollar annual revenues and meaningfully diversify cash flows, far exceeding the more limited opportunities faced by domestic-focused peers.
  
• Ongoing technology-driven operational enhancements-such as AI-driven guest services, digital check-ins, and smart marketing optimization-combined with a culture of continuous improvement, create the potential for persistent cost efficiencies and margin expansion across all business units, structurally raising long-term earnings power.

MGM Resorts International Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on MGM Resorts International compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming MGM Resorts International's revenue will grow by 3.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.1% today to 7.0% in 3 years time.
• The bullish analysts expect earnings to reach $1.3 billion (and earnings per share of $5.38) by about August 2028, up from $536.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 13.5x on those 2028 earnings, down from 17.6x today. This future PE is lower than the current PE for the US Hospitality industry at 22.2x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

MGM Resorts International Future Earnings Per Share Growth

Risks

• Despite robust digital growth, the company's heavy reliance on Las Vegas Strip revenues leaves it acutely exposed to declining traditional casino visitation, increasing competition, and broader shifts in consumer preferences toward unique, non-gambling entertainment, all of which may structurally pressure revenue growth and earnings stability over the long term.
  
• Large-scale capital expenditure on projects like MGM Grand remodels, Japan and Dubai developments, and digital transformation requires sustained high investment, while the company's already high leverage could constrain free cash flow and compress net margins, particularly if returns on these projects fall short of expectations or macroeconomic conditions weaken.
  
• The increasing over-saturation of casino and resort offerings globally, including aggressive regional and international expansion by both MGM and its competitors, risks triggering promotional pricing wars and lower industry-wide margins, putting sustained pressure on MGM's profitability and long-term earnings.
  
• The company acknowledges ongoing labor cost pressures and the need for more aggressive cost management and automation, but persistent labor shortages and rising wage demands in hospitality could significantly erode operational efficiency and reduce net profits even as revenue grows.
  
• Increasing anti-gambling sentiment and the potential for regulatory tightening in key markets such as the US, China (Macau), Brazil, and Japan could lead to higher compliance costs, restricted market access, and unanticipated setbacks in new market launches, directly impacting MGM's revenue streams and future earnings potential.

Valuation

• The assumed bullish price target for MGM Resorts International is $58.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of MGM Resorts International's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $58.0, and the most bearish reporting a price target of just $37.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $19.0 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 13.5x, assuming you use a discount rate of 12.3%.
  
• Given the current share price of $34.71, the bullish analyst price target of $58.0 is 40.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.