Intrinsic value of MGM Resorts International - MGM

Previous Close

$29.69

  Intrinsic Value

$1.90

stock screener

  Rating & Target

str. sell

-94%

  Value-price divergence*

-115%

Previous close

$29.69

 
Intrinsic value

$1.90

 
Up/down potential

-94%

 
Rating

str. sell

 
Value-price divergence*

-115%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MGM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 17.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.88
  16.40
  15.26
  14.23
  13.31
  12.48
  11.73
  11.06
  10.45
  9.91
  9.42
  8.97
  8.58
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
Revenue, $m
  9,455
  11,006
  12,685
  14,491
  16,419
  18,469
  20,635
  22,917
  25,313
  27,820
  30,440
  33,172
  36,017
  38,978
  42,056
  45,256
  48,581
  52,036
  55,627
  59,360
  63,243
  67,281
  71,485
  75,861
  80,421
  85,173
  90,129
  95,299
  100,696
  106,332
  112,219
Variable operating expenses, $m
 
  11,163
  12,839
  14,640
  16,565
  18,609
  20,771
  23,048
  25,438
  27,940
  30,554
  33,099
  35,938
  38,891
  41,963
  45,156
  48,473
  51,921
  55,504
  59,229
  63,102
  67,132
  71,326
  75,693
  80,243
  84,984
  89,929
  95,088
  100,473
  106,096
  111,970
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,375
  11,163
  12,839
  14,640
  16,565
  18,609
  20,771
  23,048
  25,438
  27,940
  30,554
  33,099
  35,938
  38,891
  41,963
  45,156
  48,473
  51,921
  55,504
  59,229
  63,102
  67,132
  71,326
  75,693
  80,243
  84,984
  89,929
  95,088
  100,473
  106,096
  111,970
Operating income, $m
  2,080
  -157
  -154
  -150
  -145
  -141
  -136
  -131
  -126
  -120
  -114
  74
  80
  86
  93
  100
  108
  115
  123
  132
  140
  149
  159
  168
  178
  189
  200
  211
  223
  236
  249
EBITDA, $m
  2,930
  945
  1,089
  1,244
  1,409
  1,585
  1,771
  1,967
  2,172
  2,388
  2,613
  2,847
  3,091
  3,345
  3,610
  3,884
  4,170
  4,466
  4,774
  5,095
  5,428
  5,775
  6,135
  6,511
  6,902
  7,310
  7,735
  8,179
  8,642
  9,126
  9,631
Interest expense (income), $m
  661
  662
  845
  1,043
  1,257
  1,485
  1,727
  1,984
  2,253
  2,537
  2,833
  3,143
  3,466
  3,803
  4,153
  4,517
  4,896
  5,289
  5,698
  6,122
  6,564
  7,023
  7,501
  7,998
  8,516
  9,055
  9,617
  10,203
  10,815
  11,453
  12,120
Earnings before tax, $m
  1,259
  -819
  -998
  -1,193
  -1,402
  -1,626
  -1,863
  -2,114
  -2,379
  -2,657
  -2,948
  -3,070
  -3,387
  -3,716
  -4,060
  -4,417
  -4,788
  -5,174
  -5,574
  -5,991
  -6,424
  -6,874
  -7,342
  -7,830
  -8,337
  -8,866
  -9,417
  -9,992
  -10,591
  -11,217
  -11,871
Tax expense, $m
  22
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  1,101
  -819
  -998
  -1,193
  -1,402
  -1,626
  -1,863
  -2,114
  -2,379
  -2,657
  -2,948
  -3,070
  -3,387
  -3,716
  -4,060
  -4,417
  -4,788
  -5,174
  -5,574
  -5,991
  -6,424
  -6,874
  -7,342
  -7,830
  -8,337
  -8,866
  -9,417
  -9,992
  -10,591
  -11,217
  -11,871

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,447
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  28,173
  31,089
  35,834
  40,934
  46,383
  52,171
  58,292
  64,738
  71,504
  78,589
  85,989
  93,706
  101,744
  110,107
  118,803
  127,841
  137,234
  146,995
  157,139
  167,685
  178,652
  190,060
  201,934
  214,298
  227,178
  240,602
  254,602
  269,207
  284,452
  300,372
  317,003
Adjusted assets (=assets-cash), $m
  26,726
  31,089
  35,834
  40,934
  46,383
  52,171
  58,292
  64,738
  71,504
  78,589
  85,989
  93,706
  101,744
  110,107
  118,803
  127,841
  137,234
  146,995
  157,139
  167,685
  178,652
  190,060
  201,934
  214,298
  227,178
  240,602
  254,602
  269,207
  284,452
  300,372
  317,003
Revenue / Adjusted assets
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
Average production assets, $m
  21,025
  24,476
  28,212
  32,227
  36,517
  41,074
  45,893
  50,968
  56,295
  61,872
  67,699
  73,775
  80,103
  86,687
  93,533
  100,649
  108,044
  115,728
  123,715
  132,018
  140,652
  149,634
  158,982
  168,716
  178,856
  189,425
  200,447
  211,946
  223,948
  236,481
  249,575
Working capital, $m
  -63
  -1,750
  -2,017
  -2,304
  -2,611
  -2,936
  -3,281
  -3,644
  -4,025
  -4,423
  -4,840
  -5,274
  -5,727
  -6,197
  -6,687
  -7,196
  -7,724
  -8,274
  -8,845
  -9,438
  -10,056
  -10,698
  -11,366
  -12,062
  -12,787
  -13,543
  -14,331
  -15,153
  -16,011
  -16,907
  -17,843
Total debt, $m
  12,988
  16,559
  20,454
  24,642
  29,115
  33,867
  38,892
  44,185
  49,740
  55,556
  61,632
  67,968
  74,567
  81,433
  88,572
  95,993
  103,704
  111,718
  120,046
  128,704
  137,708
  147,074
  156,823
  166,973
  177,548
  188,570
  200,063
  212,054
  224,570
  237,640
  251,295
Total liabilities, $m
  21,953
  25,524
  29,419
  33,607
  38,080
  42,832
  47,857
  53,150
  58,705
  64,521
  70,597
  76,933
  83,532
  90,398
  97,537
  104,958
  112,669
  120,683
  129,011
  137,669
  146,673
  156,039
  165,788
  175,938
  186,513
  197,535
  209,028
  221,019
  233,535
  246,605
  260,260
Total equity, $m
  6,220
  5,565
  6,414
  7,327
  8,302
  9,339
  10,434
  11,588
  12,799
  14,067
  15,392
  16,773
  18,212
  19,709
  21,266
  22,884
  24,565
  26,312
  28,128
  30,016
  31,979
  34,021
  36,146
  38,359
  40,665
  43,068
  45,574
  48,188
  50,917
  53,767
  56,744
Total liabilities and equity, $m
  28,173
  31,089
  35,833
  40,934
  46,382
  52,171
  58,291
  64,738
  71,504
  78,588
  85,989
  93,706
  101,744
  110,107
  118,803
  127,842
  137,234
  146,995
  157,139
  167,685
  178,652
  190,060
  201,934
  214,297
  227,178
  240,603
  254,602
  269,207
  284,452
  300,372
  317,004
Debt-to-equity ratio
  2.088
  2.980
  3.190
  3.360
  3.510
  3.630
  3.730
  3.810
  3.890
  3.950
  4.000
  4.050
  4.090
  4.130
  4.170
  4.190
  4.220
  4.250
  4.270
  4.290
  4.310
  4.320
  4.340
  4.350
  4.370
  4.380
  4.390
  4.400
  4.410
  4.420
  4.430
Adjusted equity ratio
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,101
  -819
  -998
  -1,193
  -1,402
  -1,626
  -1,863
  -2,114
  -2,379
  -2,657
  -2,948
  -3,070
  -3,387
  -3,716
  -4,060
  -4,417
  -4,788
  -5,174
  -5,574
  -5,991
  -6,424
  -6,874
  -7,342
  -7,830
  -8,337
  -8,866
  -9,417
  -9,992
  -10,591
  -11,217
  -11,871
Depreciation, amort., depletion, $m
  850
  1,102
  1,242
  1,393
  1,555
  1,726
  1,907
  2,098
  2,298
  2,508
  2,727
  2,773
  3,011
  3,259
  3,516
  3,784
  4,062
  4,351
  4,651
  4,963
  5,288
  5,625
  5,977
  6,343
  6,724
  7,121
  7,536
  7,968
  8,419
  8,890
  9,383
Funds from operations, $m
  1,773
  283
  244
  201
  152
  100
  44
  -17
  -81
  -149
  -221
  -296
  -375
  -458
  -544
  -633
  -726
  -823
  -923
  -1,028
  -1,136
  -1,249
  -1,366
  -1,487
  -1,613
  -1,745
  -1,882
  -2,024
  -2,172
  -2,327
  -2,488
Change in working capital, $m
  239
  -247
  -267
  -287
  -307
  -326
  -344
  -363
  -381
  -399
  -417
  -434
  -452
  -471
  -489
  -509
  -529
  -549
  -571
  -594
  -617
  -642
  -668
  -696
  -725
  -756
  -788
  -822
  -858
  -896
  -936
Cash from operations, $m
  1,534
  529
  511
  488
  459
  426
  388
  346
  300
  250
  196
  138
  77
  13
  -54
  -124
  -197
  -273
  -352
  -434
  -519
  -606
  -697
  -791
  -888
  -989
  -1,094
  -1,202
  -1,314
  -1,431
  -1,552
Maintenance CAPEX, $m
  0
  -790
  -920
  -1,061
  -1,212
  -1,373
  -1,544
  -1,725
  -1,916
  -2,116
  -2,326
  -2,545
  -2,773
  -3,011
  -3,259
  -3,516
  -3,784
  -4,062
  -4,351
  -4,651
  -4,963
  -5,288
  -5,625
  -5,977
  -6,343
  -6,724
  -7,121
  -7,536
  -7,968
  -8,419
  -8,890
New CAPEX, $m
  -2,262
  -3,451
  -3,735
  -4,016
  -4,290
  -4,557
  -4,819
  -5,075
  -5,327
  -5,577
  -5,826
  -6,076
  -6,328
  -6,584
  -6,846
  -7,116
  -7,395
  -7,685
  -7,987
  -8,303
  -8,634
  -8,982
  -9,348
  -9,734
  -10,140
  -10,569
  -11,022
  -11,499
  -12,002
  -12,534
  -13,094
Cash from investing activities, $m
  -2,276
  -4,241
  -4,655
  -5,077
  -5,502
  -5,930
  -6,363
  -6,800
  -7,243
  -7,693
  -8,152
  -8,621
  -9,101
  -9,595
  -10,105
  -10,632
  -11,179
  -11,747
  -12,338
  -12,954
  -13,597
  -14,270
  -14,973
  -15,711
  -16,483
  -17,293
  -18,143
  -19,035
  -19,970
  -20,953
  -21,984
Free cash flow, $m
  -742
  -3,713
  -4,144
  -4,589
  -5,042
  -5,504
  -5,974
  -6,454
  -6,944
  -7,444
  -7,957
  -8,483
  -9,024
  -9,582
  -10,159
  -10,757
  -11,376
  -12,020
  -12,690
  -13,388
  -14,116
  -14,876
  -15,671
  -16,502
  -17,372
  -18,282
  -19,236
  -20,236
  -21,284
  -22,384
  -23,536
Issuance/(repayment) of debt, $m
  -301
  3,579
  3,895
  4,188
  4,473
  4,752
  5,025
  5,292
  5,556
  5,816
  6,076
  6,336
  6,599
  6,866
  7,139
  7,421
  7,711
  8,014
  8,329
  8,658
  9,004
  9,366
  9,748
  10,151
  10,575
  11,022
  11,493
  11,991
  12,516
  13,070
  13,654
Issuance/(repurchase) of shares, $m
  1,255
  1,603
  1,847
  2,106
  2,377
  2,662
  2,959
  3,268
  3,590
  3,925
  4,272
  4,451
  4,825
  5,213
  5,616
  6,035
  6,469
  6,921
  7,390
  7,878
  8,387
  8,916
  9,468
  10,043
  10,643
  11,269
  11,923
  12,606
  13,320
  14,067
  14,848
Cash from financing (excl. dividends), $m  
  519
  5,182
  5,742
  6,294
  6,850
  7,414
  7,984
  8,560
  9,146
  9,741
  10,348
  10,787
  11,424
  12,079
  12,755
  13,456
  14,180
  14,935
  15,719
  16,536
  17,391
  18,282
  19,216
  20,194
  21,218
  22,291
  23,416
  24,597
  25,836
  27,137
  28,502
Total cash flow (excl. dividends), $m
  -224
  1,470
  1,598
  1,705
  1,809
  1,910
  2,009
  2,106
  2,202
  2,297
  2,391
  2,304
  2,400
  2,497
  2,597
  2,699
  2,805
  2,914
  3,029
  3,149
  3,274
  3,406
  3,545
  3,692
  3,846
  4,008
  4,180
  4,361
  4,552
  4,753
  4,966
Retained Cash Flow (-), $m
  -1,100
  -1,603
  -1,847
  -2,106
  -2,377
  -2,662
  -2,959
  -3,268
  -3,590
  -3,925
  -4,272
  -4,451
  -4,825
  -5,213
  -5,616
  -6,035
  -6,469
  -6,921
  -7,390
  -7,878
  -8,387
  -8,916
  -9,468
  -10,043
  -10,643
  -11,269
  -11,923
  -12,606
  -13,320
  -14,067
  -14,848
Prev. year cash balance distribution, $m
 
  1,439
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,306
  -249
  -401
  -569
  -752
  -950
  -1,162
  -1,388
  -1,628
  -1,881
  -2,147
  -2,425
  -2,716
  -3,020
  -3,336
  -3,665
  -4,006
  -4,361
  -4,730
  -5,112
  -5,510
  -5,922
  -6,351
  -6,797
  -7,261
  -7,743
  -8,245
  -8,768
  -9,314
  -9,882
Discount rate, %
 
  9.70
  10.19
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
 
  1,190
  -205
  -296
  -372
  -431
  -471
  -494
  -499
  -488
  -463
  -428
  -384
  -337
  -288
  -239
  -194
  -153
  -118
  -88
  -64
  -45
  -31
  -20
  -13
  -8
  -5
  -3
  -2
  -1
  0
Current shareholders' claim on cash, %
  100
  89.2
  79.7
  71.2
  63.7
  57.1
  51.3
  46.1
  41.4
  37.3
  33.6
  30.4
  27.6
  25.0
  22.7
  20.6
  18.6
  16.9
  15.4
  14.0
  12.7
  11.5
  10.5
  9.5
  8.6
  7.9
  7.1
  6.5
  5.9
  5.4
  4.9

MGM Resorts International is a holding company. The Company, through its subsidiaries, owns and operates casino resorts. The Company operates in two segments: domestic resorts and MGM China. Its domestic resorts segment consists of non-gaming operations, including hotel, food and beverage, entertainment and other non-gaming amenities. Its casino operations feature a range of slots, table games, and race and sports book wagering. Its MGM China’s operations consist of the MGM Macau resort and casino, and the development of an integrated casino, hotel and entertainment resort on the Cotai Strip in Macau. Under its resort operation, the Company's casino resorts offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities. It owns Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi, among others. It owns and manages CityCenter Holdings, LLC, located between Bellagio and Monte Carlo.

FINANCIAL RATIOS  of  MGM Resorts International (MGM)

Valuation Ratios
P/E Ratio 15.5
Price to Sales 1.8
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 11.1
Price to Free Cash Flow -23.4
Growth Rates
Sales Growth Rate 2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 54.2%
Cap. Spend. - 3 Yr. Gr. Rate 32.1%
Financial Strength
Quick Ratio 181
Current Ratio 0
LT Debt to Equity 208.7%
Total Debt to Equity 208.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.6%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 5.9%
Ret/ On T. Cap. - 3 Yr. Avg. 0.9%
Return On Equity 19.4%
Return On Equity - 3 Yr. Avg. 2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 41.9%
Gross Margin - 3 Yr. Avg. 39.2%
EBITDA Margin 29.3%
EBITDA Margin - 3 Yr. Avg. 18.4%
Operating Margin 22%
Oper. Margin - 3 Yr. Avg. 11.1%
Pre-Tax Margin 13.3%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 11.6%
Net Profit Margin - 3 Yr. Avg. 1.8%
Effective Tax Rate 1.7%
Eff/ Tax Rate - 3 Yr. Avg. 23.8%
Payout Ratio 0%

MGM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MGM stock intrinsic value calculation we used $9455 million for the last fiscal year's total revenue generated by MGM Resorts International. The default revenue input number comes from 2016 income statement of MGM Resorts International. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MGM stock valuation model: a) initial revenue growth rate of 16.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.7%, whose default value for MGM is calculated based on our internal credit rating of MGM Resorts International, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of MGM Resorts International.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MGM stock the variable cost ratio is equal to 101.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MGM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.1% for MGM Resorts International.

Corporate tax rate of 27% is the nominal tax rate for MGM Resorts International. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MGM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MGM are equal to 222.4%.

Life of production assets of 26.6 years is the average useful life of capital assets used in MGM Resorts International operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MGM is equal to -15.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6220 million for MGM Resorts International - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 580.27 million for MGM Resorts International is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of MGM Resorts International at the current share price and the inputted number of shares is $17.2 billion.

RELATED COMPANIES Price Int.Val. Rating
LVS Las Vegas Sand 62.80 48.86  hold
WYNN Wynn Resorts 146.81 79.68  sell
BYD Boyd Gaming 27.90 33.23  buy
MCRI Monarch Casino 40.42 23.71  sell
PENN Penn National 23.59 4.44  str.sell

COMPANY NEWS

▶ Las Vegas tourism sees changes in aftermath of shooting   [Oct-15-17 03:30PM  Associated Press]
▶ [$$] Las Vegas Police Backpedal on Key Mass-Shooting Timeline   [Oct-13-17 11:19PM  The Wall Street Journal]
▶ [$$] MGM Officially Disputes Part of Police Timeline in Vegas Shooting   [Oct-12-17 07:22PM  The Wall Street Journal]
▶ [$$] Las Vegas Shooting Victim Sues Owner of Mandalay Bay   [Oct-11-17 06:54PM  The Wall Street Journal]
▶ 10 Things to Know for Today   [06:09AM  Associated Press]
▶ Could Vegas police have taken down the gunman sooner?   [Oct-10-17 10:53PM  Associated Press]
▶ Wynn Resorts: Going Nowhere Fast?   [Oct-05-17 08:23PM  Barrons.com]
▶ Las Vegas Big Month Is a One-Time Event   [Oct-04-17 09:02PM  Motley Fool]
▶ The Latest: Shooter put camera inside hotel room peephole   [Oct-03-17 09:27PM  Associated Press]
▶ Monty Hall and Probability 101   [07:23PM  Zacks]
▶ Time to Pick Up MGM at a Discount   [05:30PM  GuruFocus.com]
▶ The Carnage at Catalonia   [10:20AM  Zacks]
▶ Do Shareholders Win When Activists Win?   [Sep-25-17 10:00AM  Fortune]
▶ 2017 Skift Global Forum   [Sep-21-17 04:22PM  Yahoo Finance Video]
▶ 2017 Skift Global Forum   [04:17PM  Yahoo Finance Video]
▶ Why This Macau-Centric Casino Operator Is Breaking Out Today   [Sep-19-17 04:08PM  Investor's Business Daily]
▶ [$$] MGM Resorts Proposes $675 Million Casino in Bridgeport   [12:51AM  The Wall Street Journal]
▶ MGM Resorts Launches First Corporate Brand Campaign   [Sep-18-17 10:00AM  PR Newswire]
▶ MGM National Harbor is changing hands  sort of for nearly $1.2B   [Sep-05-17 06:34PM  American City Business Journals]
▶ Macao Casinos Hope Hotel Supply Will Drive Demand   [Sep-04-17 09:06AM  Market Realist]
▶ Las Vegas Strip May Be Getting a New Resort   [Sep-02-17 02:00PM  Motley Fool]
▶ Play the Odds with Wynn Resorts, Limited (WYNN) Stock   [Sep-01-17 08:41AM  InvestorPlace]
Financial statements of MGM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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