MGM Resorts International (NYSE: MGM) gained nearly 12% in the last 5 trading days. Despite this move, the stock is still nearly 20% below where it was at the beginning of 2020. What does this mean? Simply that big money is pouring into MGM Resorts and other stocks that are likely to benefit the most with the success of a Covid-19 vaccine, but at the same time, the market price appears relatively low. Does this imply that MGM is a good buy right now? Our AI engine certainly suggests so, and so do the fundamentals! Let’s see how. Our AI engine analyzes past patterns in stock movements to predict near term behavior for a given level of movement in the recent period, and predicts nearly a 4.2% return for MGM Resorts over the next 1 month. But that doesn’t mean that the stock will lose its steam beyond that. In fact, the same engine predicts more than an 11% return during the next 6 month period. Our detailed dashboard highlights the expected return for MGM Resorts International’ given its recent move.
But what about the fundamentals? Our dashboard Big Movers: MGM Resorts International Moved 12.2% – What Next? lays this out, outlining MGM’s consistent pre-Covid growth and cheaper multiple relative to peers. Unless there is a meaningful setback concerning vaccine distribution or efficacy, MGM could be a good investment right now.
Let’s look at relative valuation perspective first. MGM Resorts International’s stock price decreased -27% this year, from $33.27 to $23.98, before moving 12.2% last week, and ending at $26.91. At the beginning of this year, MGM Resorts International’s trailing 12 month P/S ratio was 1.35. This figure increased 11.5% to 1.51, before ending at 1.69. This means that valuation has not declined proportionately to its revenue, implying the long-term investor expectations are intact. Also, compared to MGM Resorts International’s P/S multiple of 1.69, the figure for its peers MTN, CHDN, and SIX stands at 5.47, 6.13, and 1.58 respectively. This indicates room for valuation to grow.
If we look at the last few years, we find that MGM Resorts’ stock has decreased -0.4% between 2017 and 2019, and has decreased -19% between 2017 and now. Thus, its last week’s move is slightly at odds with the long-term trend which raises