How the Latest Las Vegas Digital Gaming Expansion Could Impact MGM Stock Value in 2025

Thinking about what to do with your MGM Resorts International stock? You are definitely not alone. When you look at those closing numbers, it is easy to feel uncertain. MGM shares just closed at $33.93, down 4.7% in the last week and a sobering 11.0% over the past month. Longer term, the story gets even more interesting, with a 0.8% return year-to-date and a five-year gain of 58.9%. This comes despite a 16.1% dip over the past year. Many investors are debating whether these movements signal a fresh opportunity or new risks to watch out for.

Why the volatility? Like many companies exposed to shifting consumer trends and broader economic uncertainty, MGM has felt the impact of global events on travel, entertainment, and investment confidence. Even so, these price moves do not tell the whole story. In fact, when it comes to valuation, MGM scores a perfect 6 out of 6 on our undervaluation checklist. This suggests there could be strong upside despite the nerves showing in recent trading, or maybe even because of them.

Let’s break down exactly how this value score is calculated, and what those traditional valuation methods really say about where MGM stands right now. Plus, stick around for our take on a smarter way to look at valuation before you make your next move.

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 estimates a company's intrinsic value by projecting its future cash flows and then discounting them back to their present value. Essentially, DCF seeks to answer what the business is worth today based on how much cash it is expected to generate in the future.

For MGM Resorts International, the latest reported Free Cash Flow (FCF) stands at $1.44 Billion. Analyst estimates cover the next five years, with FCF projected to rise to $2.09 Billion by the end of 2028. In addition, forecasts are extrapolated beyond this period, offering a look at steady long-term growth through 2035. These projections combine both analyst expectations and long-range financial modeling to arrive at a comprehensive outlook for the company’s cash creation.

Using this 2 Stage Free Cash Flow to Equity DCF approach, the estimated intrinsic value for MGM shares is $85.12. With the stock recently closing at $33.93, this suggests MGM is trading at a 60.1% discount to its projected worth according to this model.

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 60.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: MGM Resorts International Price vs Earnings

For profitable companies like MGM Resorts International, the Price-to-Earnings (PE) ratio is a popular and trusted indicator for valuation. It reflects how much investors are currently willing to pay for each dollar of earnings, giving a practical sense of the company’s market price relative to its ability to generate profit.

Determining what makes a “normal” or “fair” PE ratio is rarely straightforward. Expectations for future growth, the perceived stability or riskiness of the company, and overall sector trends all shape what investors consider a reasonable multiple. Companies expected to grow faster or take on less risk typically command higher PE ratios, while slower-growing or riskier businesses trade at lower ones.

At the moment, MGM Resorts commands a PE ratio of 17.2x. This is significantly below the Hospitality industry average of 24.4x and peers, who trade at an average of 36.6x. However, simply comparing MGM to these benchmarks only tells part of the story.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. Calculated at 24.9x for MGM, the Fair Ratio expects the multiple an investor might reasonably pay given MGM’s unique earnings growth, industry status, profit margins, market cap and overall risk. Unlike industry or peer averages, the Fair Ratio integrates these specific dynamics for a much more tailored valuation.

With MGM’s actual PE ratio at 17.2x versus the Fair Ratio of 24.9x, the shares currently look undervalued by this metric, reinforcing the opportunity signaled by the DCF analysis.

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. Let’s introduce you to Narratives. A Narrative is simply the story an investor tells about a company, connecting their assumptions and forecasts, such as future revenue, earnings, and margins, to a fair value calculation that sits behind every investment decision.

Narratives not only let you see the numbers, but also invite you to explain the “why” in plain terms. This makes investing much more approachable and grounded in your own perspective. On Simply Wall St’s Community page (used by millions of investors), Narratives are a core tool, guiding users to express their view of a company and instantly see what that outlook means for fair value compared to today’s stock price.

What’s truly unique is that Narratives are dynamic. As soon as new news breaks or earnings drop, the numbers and fair value automatically update. This allows you to quickly revalidate your thesis or react to changing conditions. For example, for MGM Resorts International, one investor’s Narrative could be bullish, projecting strong growth from digital gaming and a fair value near $58.0 per share. Another investor might focus on risks and set their fair value much lower, around $37.0 per share.

Narratives translate your beliefs into action, helping you decide not just what MGM is worth, but why you might want to buy, hold, or sell, on your own terms and in real time.

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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