Is MGM Stock a Buy at 0.67X Sales Despite Growth and Execution Risks?

MGM Resorts International MGM trades at 0.67X forward 12-month sales, a sizable discount to its history and major comparison benchmarks. That valuation gives investors a reason to consider the shares even as the company works through uneven leisure demand, margin pressure and major investment commitments.

The discount is not costless. Earnings are projected to fall sharply in 2026 before recovering in 2027, while operating volatility across Las Vegas, Macau and digital keeps execution risk in view. The central question is whether the valuation gap is wide enough to justify buying now.

MGM's Sales Multiple Signals a Valuation Discount

MGM trades at 0.67X forward 12-month sales versus 2.22X for its Zacks sub-industry, 2.3X for the broader sector and 5.07X for the S&P 500. The multiple also sits below MGM's five-year median of 0.86X, giving the shares a clear valuation discount on sales.

MGM Resorts International Price and Consensus

MGM Resorts International price-consensus-chart | MGM Resorts International Quote

A low multiple can reflect uncertainty as well as opportunity. Caesars Entertainment, Inc. CZR, another major Las Vegas and regional operator, reported second-quarter Las Vegas revenues down 3.5% while regional revenues rose 9.4%, illustrating the uneven demand backdrop across casino markets.

MGM's Earnings Profile Keeps the Discount Relevant

The Zacks Consensus Estimate for 2026 earnings is $1.95 per share, implying a 41.1% year-over-year decline. For 2027, the consensus estimate is $2.35 per share, pointing to a 20.5% rebound. That recovery profile gives the valuation case a longer runway but does not erase the near-term contraction.

Recent results show why investors may demand a discount. Second-quarter consolidated revenues rose 1% to $4.45 billion, yet adjusted earnings fell to 59 cents per share from 79 cents. Consolidated Adjusted EBITDA also declined to $610 million from $648 million.

MGM China and Digital Offer Upside Levers

MGM China revenues rose 9% to $1.12 billion in the first quarter, supported by premium-mass demand and targeted property investment. MGM Digital revenues increased 43% to $183 million, while its adjusted EBITDAR loss narrowed to $26 million from $34 million, improving the economics of that growth platform.

Wynn Resorts, Limited WYNN offers relevant Macau context. Wynn reported second-quarter operating revenues of $1.86 billion, while Adjusted Property EBITDAR at Wynn Palace increased by $44.3 million year over year. Continued premium demand across Macau could support MGM's own investment strategy if execution remains disciplined.

MGM's Cost and Osaka Risks Can Delay Re-Rating

Higher self-insurance costs and softer value-oriented Las Vegas demand remain margin risks. Luxor and Excalibur have faced pressure at the lower end of the Strip portfolio, while additional digital investment can limit near-term operating leverage even as revenues scale.

MGM also expects approximately $350-$400 million of 2026 investment in MGM Osaka, with roughly $2.1 billion of remaining funding commitments as of March 31. Those obligations raise the importance of capital discipline because a valuation re-rating may depend on converting large development spending into future returns.

MGM's Value Score Is Stronger Than Its Growth Signal

At 0.67X forward sales, MGM offers a measurable discount, but the earnings trajectory and capital commitments argue against treating that discount as a stand-alone buy case. The 2027 rebound estimate and growth in China and digital improve the longer-term picture, while current margin volatility supports patience.

MGM currently carries a Zacks Rank #3 (Hold), with a Value Score of A, Momentum Score of A, Growth Score of D and VGM Score of B. The favorable value and momentum grades support the discounted setup, but the weaker Growth Score and Hold rank keep the balance mixed. For now, the profile is more consistent with waiting for clearer earnings leverage than buying on valuation alone. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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