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While MGM Resorts International (NYSE:MGM) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$40.37 at one point, and dropping to the lows of US$27.90. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether MGM Resorts International's current trading price of US$27.90 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MGM Resorts International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In MGM Resorts International?
Good news, investors! MGM Resorts International is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that MGM Resorts International’s ratio of 10.71x is below its peer average of 22.42x, which indicates the stock is trading at a lower price compared to the Hospitality industry. Although, there may be another chance to buy again in the future. This is because MGM Resorts International’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
View our latest analysis for MGM Resorts International
What does the future of MGM Resorts International look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. MGM Resorts International's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since MGM is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.