DCF Studio

    MGM · NYQ · Consumer Cyclical

    MGM Resorts International

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -32.27

    Market price

    USD 37.81

    Implied upside

    -185.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD -32.27-185.3%
    Exit multiple
    USD 93.22+146.5%
    Market price
    USD 37.81

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 19.3bnUSD 21.3bnUSD 23.4bnUSD 25.8bnUSD 28.4bn+10.1%
    EBITUSD 679.1mUSD 747.9mUSD 823.7mUSD 907.2mUSD 999.1m+10.1%
    NOPATUSD 606.3mUSD 667.7mUSD 735.4mUSD 810.0mUSD 892.1m+10.1%
    Add depreciation & amortisationUSD 2.0bnUSD 2.2bnUSD 2.5bnUSD 2.7bnUSD 3.0bn+10.1%
    Less capital expenditureUSD -1.2bnUSD -1.3bnUSD -1.4bnUSD -1.6bnUSD -1.7bn+10.1%
    Less increase in working capitalUSD -597.2mUSD -657.7mUSD -724.4mUSD -797.8mUSD -878.7m+10.1%
    Free cashflow to firmUSD 869.8mUSD 958.0mUSD 1.1bnUSD 1.2bnUSD 1.3bn+10.1%
    Discount factor0.97070.91460.86180.81200.7651-
    Present valueUSD 844.3mUSD 876.2mUSD 909.3mUSD 943.6mUSD 979.2m+3.8%
    Present Value Of The ForecastUSD 4.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.189Reported 1.282, pulled toward 1.0 (Blume)
    Cost of equity11.54%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 9.7bn23.6% of capital
    Total debtUSD 31.4bn76.4% of capital, book value as a proxy
    Tax rate10.7%Effective, capped at statutory
    WACC6.13%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -32.27

    78% of EV

    Forecast FCFF, final year
    USD 1.3bn
    Capex at depreciation, working capital in reinvestment
    USD 892.1m
    Less reinvestment at g/ROIC (18.0% of NOPAT)
    USD -160.2m
    Capitalised
    USD 731.9m
    ROIC (reported)
    13.9%
    Terminal value, undiscounted
    USD 20.7bn
    Terminal value, discounted
    USD 15.8bn
    Enterprise value
    USD 20.4bn
    Less net debt
    USD 29.3bn
    Equity value
    USD -8.9bn

    Exit at 16.6x EBITDA

    Value per shareUSD 93.22

    92% of EV

    Terminal value, undiscounted
    USD 66.1bn
    Terminal value, discounted
    USD 50.6bn
    Enterprise value
    USD 55.2bn
    Less net debt
    USD 29.3bn
    Equity value
    USD 25.8bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.13%3.8921.5249.91103.36241.54
    5.13%-24.80-17.20-6.748.5833.24
    6.13%-41.14-37.23-32.27-25.74-16.77
    7.13%-51.73-49.50-46.82-43.51-39.31
    8.13%-59.15-57.81-56.26-54.41-52.19

    Outlined: this model. Green text: above today's price of 37.81. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year10.1%33.5%+23.4pp
    EBIT margin3.5%7.1%+3.6pp
    Discount rate6.1%4.3%-1.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.