Here's Why Investors Should Retain MGM Resorts (MGM) Stock
MGM Resorts International MGM will likely benefit from the solid Sports betting and iGaming prospects, international expansion and digital initiatives. Also, its focus on marketing strategies bodes well. However, a volatile macroeconomic environment is a concern.
Let us discuss the factors that highlight why investors should retain the stock for now.
Factors Driving Growth
Sports betting and iGaming remain core growth catalysts for the company. Recently, BetMGM, MGM Resorts International's sports betting, and iGaming partner shared an update on its operations. It announced meeting its 2023 targets, hitting the upper range of revenues between $1.8 billion and $2.0 billion and achieving EBITDA profitability in the later part of the year.
Enhancements in BetMGM's digital sports and iGaming capabilities have strategically positioned the platform to invest assertively in brand development, with a focus on acquiring and retaining players. BetMGM outlined strategic plans to launch its brand in Ontario and Pennsylvania, aligning this with a popular show's promotional schedule to heighten the iGaming experience and enhance user engagement. BetMGM set a goal to reach a $500 million EBITDA by 2026.
MGM outlined plans to fortify marketing strategies for BetMGM and MGM Rewards customers while improving cross-play between regional and Las Vegas operations. Expectations are buoyed by upcoming events like the Super Bowl and the return of Formula One in the fall of '24.
The company's pursuits in Japan and New York show promise, with ongoing efforts to secure gaming licenses. Substantial progress has been made in digital ventures, particularly in the U.K., leveraging acquisitions and partnerships to expand market offerings and reach. During the third quarter of 2023, the company entered into an implementation agreement with Japan’s central government. Also, it stated progress with respect to the luxury development in Dubai.
The company is committed to optimizing operations, catering to diverse customer segments and boosting international tourism. For 2024, the company foresees future booking rates and group dynamics to be backed by Marriott's direct bookings launch and the renovated Mandalay Bay Convention Center. The recent improvements in infrastructure, such as the finalization of the Cosmopolitan City Center and Bellagio Bridge, are intended to enhance the overall guest experience.
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In the past three months, shares of MGM Resorts have gained 25.1% compared with the industry’s growth of 17.6%.
Concerns
MGM Resorts functions within fiercely competitive sectors in Las Vegas and Macau. The rise in hotel openings and promotional initiatives has intensified competition within these markets. Despite consecutive improvements, the company remains vigilant due to the prevailing uncertain macroeconomic conditions. Additionally, a rise in corporate expenses poses a concern.
Zacks Rank & Key Picks
MGM Resorts currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Live Nation Entertainment, Inc. LYV flaunts a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 37.5%, on average. Shares of LYV have increased 35.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LYV’s 2024 sales and EPS suggests an improvement of 8.2% and 61.1%, respectively, from the prior-year levels.
JAKKS Pacific, Inc. JAKK sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 61.8%, on average. Shares of JAKK have skyrocketed 109.5% in the past year.
The Zacks Consensus Estimate for JAKK’s 2024 sales calls for 3.6% growth from the year-earlier levels.
Accel Entertainment, Inc. ACEL carries a Zacks Rank #2 (Buy). ACEL has a trailing four-quarter earnings surprise of 27.7%, on average. Shares of ACEL have surged 29.5% in the past year.
The Zacks Consensus Estimate for ACEL’s 2024 sales calls for 2.7% growth from the year-earlier levels.
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