Please ensure Javascript is enabled for purposes of website accessibility

2-Star Stocks Poised to Plunge: MGM Mirage

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Market-lagging returns could be written in this two-star stock.

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, casino operator MGM Mirage (NYSE:MGM) has received a distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly rated stocks have outperformed the S&P.

With that in mind, let's take a closer look at MGM's business, and see what CAPS investors are saying about the stock right now.

MGM facts

Headquarters (founded)

Las Vegas, Nevada (1986)

Market Cap

$3.53 billion

Industry

Resorts and Casinos

TTM Revenue

$7.51 billion

Management

CEO James Murren (since December 2008)
CFO Daniel D'Arrigo (since August 2007)

Annual Revenue Growth (Average, Past Five Years and TTM)

14.5% and (1.3%)

Competitors

Wynn Resorts (NASDAQ:WYNN)
Las Vegas Sands (NYSE:LVS)

CAPS members bearish on MGM also bearish on

General Motors (NYSE:GM)
KB Home (NYSE:KBH)

CAPS members bullish on MGM also bullish on

General Electric (NYSE:GE)
Google (NASDAQ:GOOG)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 52 of the 145 All-Star members who have rated MGM -- some 36% -- believe the stock will underperform the S&P 500 going forward. These bears include jgseattle and arbitare, both of whom are ranked in the top 10% of our community.

Last week, jgseattle wrote that MGM currently "has enough cashflow to cover the debt payment. I think this will change as the credit issues start to hit the consumer. How important is the trip to LV when you need to pay for food?"

In a pitch from last month, arbitare follows that bearish logic, predicting that whatever happens in Vegas ... will eventually come to a close:

They say the only way to win at Las Vegas gambling is to not bet. Except for Las Vegas casino stocks, which the odds are going to zero. An overbuilt and over-hyped city built on illusion of the "wealth effect" Americans are losing and will not likely return for decades.

Las Vegas will die a slow death. Every state wants gambling revenue, so will broke Americans drive / fly all the way to Vegas or drive 20 minutes to the Indian or River Boat Casino to lose their money? Would you want to retire in 100 degree heat?

... Cash in your chips and walk away, is my recommendation.

What do you think about MGM, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Google is a Motley Fool Rule Breakers pick. The Fool's disclosure policy always gets a perfect score.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

MGM Resorts International Stock Quote
MGM Resorts International
MGM
$35.01 (-3.21%) $-1.16
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$119.55 (-1.77%) $-2.15
General Electric Company Stock Quote
General Electric Company
GE
$79.92 (-1.42%) $-1.15
General Motors Company Stock Quote
General Motors Company
GM
$38.40 (-1.51%) $0.59
Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
WYNN
$65.42 (-3.57%) $-2.42
KB Home Stock Quote
KB Home
KBH
$32.08 (-3.05%) $-1.01
Las Vegas Sands Stock Quote
Las Vegas Sands
LVS
$37.45 (-2.17%) $0.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.