MGM Resorts (MGM) Valuation in Focus After Key Progress Toward New York Casino License

MGM Resorts International (MGM) has caught the market’s eye after clearing a key hurdle in its $2.3 billion Empire City expansion: local approval for a full casino license in Yonkers. Unlike rivals whose Manhattan bids stalled, MGM’s Yonkers project now heads to the state Gaming Facility Location Board. This puts the company in a strong position as New York considers who will receive the prized new licenses. For investors, this is more than just another regulatory step and could represent a transformative event that has the potential to reshape MGM’s footprint in the highly competitive Northeast market.

These developments come as MGM’s stock has drifted over the year, influenced by softer Las Vegas results and increased competition among regional casinos. The share price is down 10% over the last year, even as some technical indicators have remained steady and broader prospects for MGM have improved through major share repurchases and international growth. This recent surge of optimism may reflect shifting risk perceptions and renewed momentum as the New York milestone approaches.

The key question now is whether the potential of Empire City is already reflected in the current stock price, or if there is still an opportunity before any further upside. What, if anything, is the market overlooking?

Most Popular Narrative: 25.7% Undervalued

The prevailing narrative considers MGM Resorts International sharply undervalued compared to its estimated fair value, based on analysts' forward-looking assumptions and a discount rate of 12.3%.

"Ongoing capital investments in property upgrades, high-end experiential offerings (such as VIP suites, new luxury villas, and exclusive partnerships like Marriott), and strategic renovations are positioned to enhance pricing power and drive RevPAR (revenue per available room). This should support long-term earnings growth and improve profitability per visitor."

Ready to discover the playbook behind this bullish outlook? Behind the headline projection is a growth model built on international expansion, luxury property upgrades, and unique margin improvements. Curious which future milestones and key assumptions ignite this valuation? The answers could reshape your perspective on MGM’s potential path.

Result: Fair Value of $47.92 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in leisure visitation or costly execution missteps on ambitious projects could quickly turn optimism into pressure on MGM's earnings outlook.

Find out about the key risks to this MGM Resorts International narrative.

Another View: Discounted Cash Flow Model

Taking another approach, the SWS DCF model also suggests MGM is trading below estimated fair value. This model focuses on projected future cash flows rather than market comparisons. Does this reinforce the optimism, or does it overlook hidden risks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out MGM Resorts International for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own MGM Resorts International Narrative

If you see things differently or want to dig into the numbers yourself, it’s easy to shape your own view in just a few minutes. Do it your way.

A great starting point for your MGM Resorts International research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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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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