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MGM Resorts International (NYSE:MGM): Poised For Long-Term Success?

Simply Wall St

MGM Resorts International’s (NYSE:MGM) latest earnings announcement in December 2018 suggested that the business endured a major headwind with earnings deteriorating by -77%. Below, I’ve presented key growth figures on how market analysts predict MGM Resorts International’s earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for MGM Resorts International

Market analysts’ consensus outlook for next year seems optimistic, with earnings expanding by a significant 51%. This strong growth in earnings is expected to continue, bringing the bottom line up to US$964m by 2022.

NYSE:MGM Past and Future Earnings, March 11th 2019

While it’s helpful to be aware of the growth rate each year relative to today’s value, it may be more beneficial to evaluate the rate at which the company is growing on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of MGM Resorts International’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 21%. This means, we can anticipate MGM Resorts International will grow its earnings by 21% every year for the next couple of years.

Next Steps:

For MGM Resorts International, I’ve compiled three key factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is MGM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MGM is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MGM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.