Casino-based resorts have certainly changed over the years. The word casino translates to "small house," and the first casinos were just that -- small, dimly lit gambling venues.
Over time, casinos evolved into colossal resorts, complete with entertainment, convention facilities, luxury shopping malls, theme parks, pools, and fine dining. These comprehensive resorts became known as integrated resorts, "integrating" multiple activities into one experience.
Below are two casino stocks whose companies have embraced the integrated resort model, one of which looks to be at a screaming discount.
NYSE: LVS
Key Data Points
1. Las Vegas Sands: Exposure to the Asian gaming market
Las Vegas Sands (LVS 0.02%) operates entirely in Asia, the world's biggest gaming market. With its expansive resorts in China and Singapore, the company's "Las Vegas" title is slightly deceiving -- although Sands is still headquartered there.
The self-described "world's leading integrated resort developer," Las Vegas Sands helped pioneer a new era in the casino experience. First launching the game-changing Las Vegas-based Venetian Hotel and Casino in 1999, Sands later expanded into Macau, China, and Singapore -- laying the groundwork for a thriving resort and gaming industry in Asia.
Sands sold its Las Vegas Venetian resort last year for $6.25 billion and now operates five expansive resorts in Macau, China -- including the Venetian Macau -- as well as one in Singapore. Fully focused on the Asian gaming market for the moment, Sands aims to grow its presence in Macau and Singapore while exploring new markets. With the easing of global travel restrictions, Sands anticipates a recovery and claims to be positioned "exceedingly well" for future growth.
NYSE: MGM
Key Data Points
2. MGM Resorts is a diversified global superpower
In contrast to Sands' six resorts, MGM Resorts International (MGM +1.10%) boasts 32 resort destinations worldwide, spread across the U.S., China, and Japan. Not limited to physical resorts, the company also earns revenue from online sportsbook BetMGM.
Founded in 2018, BetMGM emerged as the product of a 50/50 partnership between MGM Resorts and Entain, one of the largest sports betting and gaming companies. Utilizing Entain's technology, BetMGM offers sports betting as well as other iGames including Borgata Casino, Party Casino, and Party Poker. MGM announced in May that it had reached the top spot among online sports betting venues, claiming a 25% share of a market estimated at $37 billion.
Continuously refining its portfolio of resorts, MGM recently announced the sale of its Gold Strike Tunica property and acquired operations of the Cosmopolitan of Las Vegas. MGM continues to pursue international expansion efforts as well, currently seeking integrated resort opportunities in Japan. MGM International Resorts looks well on its way to achieving its vision of being the world's premier gaming entertainment company.
Image Source: MGM Resorts International.
Which is better?
To gauge which company is a better buy at the moment, let's compare the two companies using the price-to-sales ratio. Based purely on revenue, the price-to-sales (P/S) ratio can tell us whether a company is undervalued or overpriced -- the lower the P/S, the better.
| Metric | Las Vegas Sands | MGM Resorts International |
|---|---|---|
| Market cap | $28.7 billion | $11.7 billion |
| Price-to-sales ratio | 7.45 | 0.98 |
With a far lower price-to-sales ratio, MGM Resorts International makes the better buy. Also, considering that MGM is profitable and Las Vegas Sands currently operates at a loss, MGM stock presents much more upside potential to investors at this time.
