Is MGM Resorts International a Buy?

Core Viewpoint - MGM Resorts International is experiencing a recovery in its cash-producing casinos in Macao, but its stock has underperformed the S&P 500 over the past decade, raising questions about its potential for market-beating returns [1][5]. Company Overview - MGM Resorts owns 31 hotel and gaming destinations globally, with notable properties including the MGM Grand in Las Vegas and casinos in Mississippi, Michigan, and Maryland [2]. - The company's most significant revenue sources are its two casinos in Macao, which have recently begun to recover from pandemic-related impacts, with revenue rising 78% year-over-year to $1.1 billion in Q1 2024 [2][3]. Financial Performance - In Q1 2024, MGM Resorts reported total revenue of$4.4 billion, a 13% increase from the previous year, with Las Vegas resorts contributing $2.3 billion, approximately 52$217 million in Q1 2024, which was lower than the previous year's performance due to a one-time sale of the Gold Strike Casino Resort [4]. Market Position - MGM Resorts has outperformed competitors like Las Vegas Sands and Wynn Resorts in terms of delivering positive returns over the past decade, but it has significantly underperformed the S&P 500 [4][5]. - The company's price-to-earnings (P/E) ratio is below 18, which is lower than the S&P 500 average of about 24.5, indicating a less attractive valuation compared to its peers [5]. Future Outlook - The recovery in Macao and the planned $10 billion casino complex in Osaka, Japan, expected to open in 2030, could positively impact MGM's long-term focus on Asia [3][7]. - Despite potential recovery, the stock is viewed as one that investors might want to avoid due to its historical underperformance against the S&P 500 and the cyclicality of the economy [6][7].