The resort and casino company had record revenue in 2024. Is it time to buy MGM stock?
MGM Resorts (NYSE:MGM) got a boost from its convention business in the fourth quarter as the company reported solid Q4 earnings that beat estimates.
MGM’s strong fourth quarter capped off a record year for the casino giant, which reported revenue of $17.2 billion, a 7% increase over 2023.
The gambling stock was one of the biggest movers on Thursday due to the Q4 results and its outlook for 2025. The stock was up almost 15% in early trading to more than $39 per share.
Is MGM stock a buy?
BetMGM drives revenue growth
MGM had solid results in Q4 with revenue of $4.3 billion, down 1% from the same quarter a year ago. This was slightly better than the $4.28 billion that analysts had anticipated.
Net income was $157 million, which was down significantly from $313 million in the prior year quarter. The difference in net income relates to a spike in net property transaction expenses, among other items. Earnings were 52 cents per share, and 45 cents per share on an adjusted basis, which was better than the 35 cents per share that analysts had projected.
MGM’s cash cow is its Las Vegas Strip hotels, which include the Bellagio, MGM Grand, Aria, Mandalay Bay, and the Excalibur, to name a few. The Vegas Strip hotels produced revenue of $2.2 billion in Q4, down 6% from the prior year quarter. This was due primarily to a decrease in casino and room revenues compared to unusually strong results in the year prior due to the Formula 1 event that took place.
Casino revenue on the Strip was down 15% to $501 million. Room revenue was 6% lower in Vegas to $822 million, but occupancy rates were up 3 percentage points to 94%. The average rate fell to $271 per night from $295 per night. Likewise, the revenue per available room fell to $254 per night from $271 per night.
However, regional operations, meaning hotels in the U.S. outside of Vegas, did well, with revenue up 7% to $932 million. MGM China also outperformed, with revenue up 4% year over year to 1%.
Also, MGM’s Digital segment, which includes the BetMGM sports betting app, had strong growth, with revenue up 28% in the quarter to $552 million. The company anticipates revenue of $2.4 billion to $2.5 billion in 2025 for BetMGM. It also anticipates that the sports betting business will be profitable this year after posting a $39 million net loss in 2024.
“Our digital businesses are also on a positive trajectory, with our BetMGM venture in North America expected to be profitable this year and our global MGM Digital business integrating and scaling to address its significant $41 billion market opportunity,” MGM President and CEO Bill Hornbuckle said.
Convention city
One of the key reasons why MGM stock was surging on Thursday was its promising outlook for 2025. The growth and profitability of MGM Digital was part of it, as was its strong convention bookings.
In December of 2024, MGM booked a record number of conventions at its properties, boosted by its partnership with Marriott. That momentum continued into January with strong bookings in both Vegas and regional properties. That creates a pipeline for revenue growth in 2025 and beyond.
“The bookings in December were 43% higher than our prior record month, a promising trend for our future,” Hornbuckle said on the earning call. “We concluded our first year with Marriott in 2024, which outperformed our original expectations with over 660,000 room nights stayed in the year and higher track spend in the leisure package rooms we look to displace. Importantly, we see further runway to grow in 2025 since all of our properties will be live for a full year of bookings.”
Analysts are bullish about MGM’s prospects, as MGM stock got several price target upgrades. Currently, MGM has a median price target of $48 per share, which would suggest 21% growth.
MGM stock is nicely valued with a P/E of 14 and a price-to-sales ratio of just 0.62. It looks like a pretty good buy, given its valuation and growth levers.
