Better Buy: MGM Resorts or Las Vegas Sands Stock?

With Macao reopened after COVID-19 restrictions were lifted, the gambling industry there expects an estimated $16 billion in 2023 revenue.

Today, I'll highlight two American companies with exposure to the Asian gaming market and determine which of these casino stocks is the better buy.

The case for MGM Resorts International

After a 27% year-over-year revenue increase last quarter, MGM Resorts International (MGM -1.50%) looks forward to "tremendous opportunities for growth" in Macao, according to CEO Bill Hornbuckle. During the Q4 earnings call last month, he encouraged investors by claiming, "Macao is back."

Hornbuckle anticipates robust growth in all of MGM's non-Vegas regional segments, including New York and Japan, but expressed the most confidence in the Macao region. He described MGM's China properties as "the highest-earning businesses within our company" and noted positive early results from the Lunar New Year holiday earlier this year.

As far as Las Vegas is concerned, business has been thriving for MGM Resorts. Q4 marked the fifth consecutive record quarter for adjusted property earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) among MGM's Las Vegas Strip resorts.

During the earnings call, CFO Jonathan Halkyard declared, "Demand in Las Vegas remains strong across all segments," from MGM's diverse non-gambling entertainment options to casino, food and beverage, and room sales. 

MGM Resorts' fourth-quarter consolidated revenue of $3.6 billion marked an 18% improvement over the same period in 2021, and net income attributable to the company came in at $284 million -- a 117% year-over-year increase.

The case for Las Vegas Sands

A pure play on the Asian gambling market, Las Vegas Sands (LVS -0.74%) operates five integrated resorts in Macao and one in Singapore. After signing a new 10-year gaming concession in Macao last quarter, Sands plans to further invest in the region. 

Clearly relieved about the reopening, CEO Rob Goldstein stated, "Macao will mature into a vibrant, diversified tourism market over the coming years," during Sands' fourth-quarter earnings call. Indeed, after restrictions were lifted in early January, Macao enjoyed an 83% jump in gambling revenue for the month, welcoming almost a half million guests during Lunar New Year. 

Meanwhile, Sands' Singapore resort blossomed last quarter. Pent-up demand built as the year progressed, and Marina Bay Sands enjoyed its best performance in Q4.

Chief Operating Officer Patrick Dumont stated that "every segment is working" at Marina Bay, and the resort posted all-time high records for gambling and retail revenue. Elaborating on Sands' ability to retain high demand levels at Marina Bay Sands amid price increases, Goldstein boasted, "It's just that good and that desirable." 

The future looks bright for Las Vegas Sands, but pandemic restrictions plagued the company in 2022. Fourth-quarter operating losses grew 20% year over year, and Las Vegas Sands endured a $169 million net loss -- a 37% bigger impact than Q4 2021's net loss.

Which casino stock is the better buy?

To determine which stock is the better buy in today's market, I've compared their price-to-sales ratios (P/S) and five-year annual growth estimates.

Data source: Yahoo! Finance.

With a much more appealing P/S ratio and a slightly higher five-year annual growth estimate, MGM Resorts International stock is today's winner.

MGM's diversified portfolio of resorts also makes it a more attractive investment. While Las Vegas Sands works solely within the Asian gaming industry, MGM Resorts International operates a diversified portfolio of casino resorts worldwide, offering a potentially safer long-term investment in an uncertain global economy.