Does MGM’s Recent 3.3% Rebound Signal a Shift in Value for 2025?

Thinking about what to do next with MGM Resorts International stock? You are not alone. Investors have been watching MGM’s price swings closely, trying to decide whether this is a classic value opportunity or just a rebound story with baggage. Over the past week, the stock inched up 3.3%, hinting at renewed market optimism after a rocky patch. Still, MGM’s 1-year return stands at -21.1%, and it has underperformed over both the 3-year and year-to-date periods. What is behind this tug-of-war between cautious sellers and potential bargain hunters?

Several recent headlines have kept sentiment moving. MGM’s push into international expansion, alongside steady recovery in Las Vegas tourism, has some analysts calling for a turnaround. Add in the company’s strategic partnerships and a wave of investments in digital gaming, and it becomes clear why investors are actively re-evaluating MGM’s risk profile. These developments have made the future look more dynamic, while the price still carries some discount from prior uncertainty.

This brings us to the heart of the matter: valuation. According to six major valuation checks, MGM scores a 6 out of 6, which puts it in elite company for potential undervaluation. But how should investors read into that number, and is there more to the story than a simple score can provide? Up next, we will break down the key methods analysts use to value MGM and reveal an often-overlooked metric that could give you the true edge in judging whether the stock belongs in your portfolio.

Why MGM Resorts International is lagging behind its peers

Approach 1: MGM Resorts International Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a tool that estimates a company’s value by projecting its future cash flows and then discounting them back to today’s dollars. This provides investors with a sense of what the company is really worth if all goes as expected. This approach is especially helpful when a company’s current market price might not reflect its true long-term potential.

For MGM Resorts International, the DCF model uses a 2 Stage Free Cash Flow to Equity approach. The most recent reported Free Cash Flow (FCF) for MGM is about $1.44 billion. Analyst projections suggest this figure will continue to rise, with FCF expected to reach $2.12 billion by the end of 2028. Projections for the coming decade, based on a mix of analyst estimates and internal extrapolation, show a steady climb in annual FCF. This provides investors with optimism about the company’s underlying earnings power.

Based on these cash flow projections, the DCF calculation puts MGM’s intrinsic value at $86.37 per share. At current prices, this implies the stock is trading at a 61.9% discount to its projected fair value, which suggests that MGM is significantly undervalued by the market.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for MGM Resorts International.

Our Discounted Cash Flow (DCF) analysis suggests MGM Resorts International is undervalued by 61.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: MGM Resorts International Price vs Earnings

The price-to-earnings (PE) ratio is a favored valuation metric for companies that are consistently profitable, like MGM Resorts International. It compares a company’s stock price to its earnings per share, offering a straightforward way for investors to gauge whether a stock is priced attractively compared to its current profitability.

What makes a “normal” or “fair” PE ratio is influenced by factors like a company’s expected growth, stability of earnings, and the level of risk in its industry. Companies with strong expected earnings growth and lower risk tend to command higher PE ratios, while those facing more uncertainty or slower growth may see lower ratios.

MGM’s current PE ratio stands at 16.7x, which sits well below both the hospitality industry average of 24.1x and its peer average of 35.2x. At a glance, this suggests the stock could be undervalued. However, a more nuanced appraisal comes from Simply Wall St’s “Fair Ratio.” This metric estimates what MGM’s PE should be by factoring in not just industry averages or peer multiples, but also the company’s own growth prospects, profit margins, market cap, and risk profile. For MGM, the Fair Ratio is 24.7x, taking these added dimensions into account and providing a tailored benchmark for valuation.

Comparing MGM’s actual PE of 16.7x to its Fair Ratio of 24.7x, the stock appears undervalued on this basis as well. This suggests that, beyond surface comparisons, MGM offers a margin of safety for value-conscious investors, assuming its fundamentals hold steady.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your MGM Resorts International Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your personalized story about a company, connecting what you believe about its future to clear, transparent revenue, margin and fair value estimates. It bridges the gap between financial models and your own real-world perspective, helping you make sense of what the numbers actually mean for your investment decision.

Narratives make investing more accessible by providing an easy way to connect a company’s qualitative story with quantitative forecasts and an estimated fair value. On Simply Wall St’s Community page, millions of investors use Narratives to decide when to buy or sell by comparing their Fair Value estimates to the current price, anchored in their unique view of MGM Resorts International’s prospects.

What sets Narratives apart is their dynamic nature: they update automatically when fresh news, earnings, or company updates appear, so your view always reflects the latest information. For example, some investors have set their MGM fair value as high as $58 per share, reflecting optimism about new luxury resorts and digital gaming, while the most cautious see fair value around $37, focusing on risks from capital commitments and cost pressures.

Do you think there's more to the story for MGM Resorts International? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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