Should I Buy MGM Resorts (MGM)? Finance YouTuber Analysis

The YouTuber, a current shareholder, believes that even a premium buyout offer of $53-55 per share would undervalue MGM Resorts' long-term potential. He highlights the company's free cash flow generation and the potential from its Japan resort as key drivers that the market may be underappreciating.

“I would be very disappointed as a shareholder with a buyout even if they get a little bit of a premium up to let's say 53, 54, 55 dollars per share. Even that I think would underestimate the potential for MGM Resorts long term.” — ▶ 6:00

The YouTuber believes MGM Resorts offers significant upside due to its online gaming segment (BetMGM) now generating cash flow back to the parent company sooner than expected. He also highlights the future potential of the Japan resort opening in 2030, which could be highly profitable. The stock is considered a value play, trading at a low multiple of cash flow, and management is actively buying back shares.

“I think there's still huge upside for MGM resorts. you get a nice combination of value and optionality for growth as investors. That's exactly what I want from an asymmetric investment.” — ▶ 07:00

The analyst views MGM Resorts as undervalued, with a forward P/E of 16 and strong cash flow generation from its Las Vegas and regional operations. The company is actively buying back shares and has significant growth catalysts in its now EBITDA-positive BetMGM online gaming division and the upcoming MGM Japan casino, which is expected to be highly profitable.

“I think the stock is even cheaper than that when you look at their cash flow. Let's go to some of the operating numbers. There are three places where you're going to want to look at the operating trends for MGM resorts.” — ▶ Watch clip

The YouTuber suggests buying MGM Resorts, citing its strong cash flow from Las Vegas and Macau operations, and the significant growth potential from its 40% stake in the upcoming Japan casino. He also notes aggressive share buybacks (15% annually) and the digital business (BetMGM, LeoVegas) expected to become cash flow positive, all at a P/E of 13.

“Love the valuation and that growth potential if you have a long-term view like I do.” — ▶ Watch clip

The analyst views MGM as an attractive investment due to its strong cash flow generation and reasonable valuation. He calculates an Enterprise Value to adjusted property EBITDA multiple of just over 5x, which he considers attractive. The company is also returning cash to shareholders through buybacks and has limited capital expenditure needs, making it a 'cash extraction business'.

“I still think this industry can be very profitable for investors long term if you're just willing to buy and hold and ride that cash machine but what do you think about Casino stocks any questions that you have leave those in the comments section below be happy to cover anything I can don't forget to subscribe to asymmetric investing thanks for watching everybody see you here next time” — ▶ Watch clip