Intrinsic value of MGM Resorts International - MGM

Previous Close

$27.66

  Intrinsic Value

$19.68

stock screener

  Rating & Target

sell

-29%

Previous close

$27.66

 
Intrinsic value

$19.68

 
Up/down potential

-29%

 
Rating

sell

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 0001), $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 14.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  17.50
  16.25
  15.13
  14.11
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
Revenue, $m
  13,822
  16,068
  18,498
  21,108
  23,895
  26,853
  29,980
  33,271
  36,725
  40,340
  44,115
  48,051
  52,150
  56,415
  60,848
  65,457
  70,246
  75,223
  80,395
  85,772
  91,364
  97,182
  103,238
  109,543
  116,113
  122,960
  130,101
  137,552
  145,330
  153,452
Variable operating expenses, $m
  11,716
  13,527
  15,485
  17,589
  19,835
  22,220
  24,740
  27,393
  30,176
  33,090
  35,556
  38,728
  42,032
  45,469
  49,043
  52,757
  56,617
  60,628
  64,797
  69,131
  73,638
  78,327
  83,208
  88,290
  93,585
  99,104
  104,859
  110,864
  117,133
  123,679
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
  11,716
  13,527
  15,485
  17,589
  19,835
  22,220
  24,740
  27,393
  30,176
  33,090
  35,556
  38,728
  42,032
  45,469
  49,043
  52,757
  56,617
  60,628
  64,797
  69,131
  73,638
  78,327
  83,208
  88,290
  93,585
  99,104
  104,859
  110,864
  117,133
  123,679
Operating income, $m
  2,105
  2,541
  3,012
  3,519
  4,059
  4,633
  5,240
  5,879
  6,549
  7,250
  8,559
  9,323
  10,118
  10,945
  11,806
  12,700
  13,629
  14,595
  15,598
  16,641
  17,726
  18,855
  20,030
  21,253
  22,528
  23,857
  25,242
  26,688
  28,197
  29,772
EBITDA, $m
  3,912
  4,548
  5,236
  5,975
  6,764
  7,601
  8,486
  9,418
  10,395
  11,419
  12,487
  13,602
  14,762
  15,969
  17,224
  18,528
  19,884
  21,293
  22,757
  24,279
  25,862
  27,509
  29,223
  31,008
  32,867
  34,806
  36,827
  38,936
  41,137
  43,437
Interest expense (income), $m
  661
  825
  1,049
  1,294
  1,558
  1,842
  2,145
  2,467
  2,808
  3,166
  3,542
  3,935
  4,346
  4,774
  5,221
  5,685
  6,167
  6,669
  7,190
  7,732
  8,295
  8,880
  9,488
  10,122
  10,781
  11,467
  12,182
  12,927
  13,704
  14,515
  15,362
Earnings before tax, $m
  1,280
  1,492
  1,719
  1,961
  2,217
  2,488
  2,773
  3,071
  3,383
  3,708
  4,624
  4,977
  5,344
  5,725
  6,121
  6,533
  6,960
  7,405
  7,866
  8,347
  8,847
  9,367
  9,908
  10,473
  11,061
  11,675
  12,315
  12,983
  13,681
  14,411
Tax expense, $m
  346
  403
  464
  529
  599
  672
  749
  829
  913
  1,001
  1,248
  1,344
  1,443
  1,546
  1,653
  1,764
  1,879
  1,999
  2,124
  2,254
  2,389
  2,529
  2,675
  2,828
  2,986
  3,152
  3,325
  3,506
  3,694
  3,891
Net income, $m
  935
  1,089
  1,255
  1,431
  1,619
  1,816
  2,024
  2,242
  2,469
  2,707
  3,375
  3,633
  3,901
  4,179
  4,468
  4,769
  5,081
  5,405
  5,743
  6,093
  6,458
  6,838
  7,233
  7,645
  8,075
  8,523
  8,990
  9,478
  9,987
  10,520

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  35,531
  41,305
  47,552
  54,263
  61,426
  69,031
  77,069
  85,530
  94,409
  103,701
  113,406
  123,525
  134,062
  145,024
  156,423
  168,270
  180,581
  193,374
  206,671
  220,494
  234,870
  249,826
  265,392
  281,602
  298,490
  316,093
  334,451
  353,604
  373,598
  394,477
Adjusted assets (=assets-cash), $m
  35,531
  41,305
  47,552
  54,263
  61,426
  69,031
  77,069
  85,530
  94,409
  103,701
  113,406
  123,525
  134,062
  145,024
  156,423
  168,270
  180,581
  193,374
  206,671
  220,494
  234,870
  249,826
  265,392
  281,602
  298,490
  316,093
  334,451
  353,604
  373,598
  394,477
Revenue / Adjusted assets
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
Average production assets, $m
  27,076
  31,476
  36,237
  41,351
  46,810
  52,605
  58,730
  65,178
  71,944
  79,025
  86,421
  94,132
  102,162
  110,516
  119,202
  128,230
  137,612
  147,361
  157,494
  168,028
  178,983
  190,380
  202,243
  214,595
  227,465
  240,879
  254,869
  269,465
  284,701
  300,612
Working capital, $m
  -2,073
  -2,410
  -2,775
  -3,166
  -3,584
  -4,028
  -4,497
  -4,991
  -5,509
  -6,051
  -6,617
  -7,208
  -7,823
  -8,462
  -9,127
  -9,819
  -10,537
  -11,283
  -12,059
  -12,866
  -13,705
  -14,577
  -15,486
  -16,431
  -17,417
  -18,444
  -19,515
  -20,633
  -21,799
  -23,018
Total debt, $m
  19,429
  23,956
  28,854
  34,115
  39,731
  45,694
  51,995
  58,628
  65,589
  72,875
  80,483
  88,416
  96,677
  105,272
  114,209
  123,496
  133,148
  143,178
  153,603
  164,441
  175,711
  187,437
  199,641
  212,349
  225,589
  239,390
  253,782
  268,799
  284,474
  300,843
Total liabilities, $m
  27,856
  32,383
  37,281
  42,542
  48,158
  54,121
  60,422
  67,055
  74,016
  81,302
  88,910
  96,843
  105,104
  113,699
  122,635
  131,923
  141,575
  151,605
  162,030
  172,868
  184,138
  195,863
  208,068
  220,776
  234,016
  247,817
  262,209
  277,226
  292,901
  309,270
Total equity, $m
  7,675
  8,922
  10,271
  11,721
  13,268
  14,911
  16,647
  18,474
  20,392
  22,399
  24,496
  26,681
  28,957
  31,325
  33,787
  36,346
  39,005
  41,769
  44,641
  47,627
  50,732
  53,962
  57,325
  60,826
  64,474
  68,276
  72,241
  76,379
  80,697
  85,207
Total liabilities and equity, $m
  35,531
  41,305
  47,552
  54,263
  61,426
  69,032
  77,069
  85,529
  94,408
  103,701
  113,406
  123,524
  134,061
  145,024
  156,422
  168,269
  180,580
  193,374
  206,671
  220,495
  234,870
  249,825
  265,393
  281,602
  298,490
  316,093
  334,450
  353,605
  373,598
  394,477
Debt-to-equity ratio
  2.530
  2.690
  2.810
  2.910
  2.990
  3.060
  3.120
  3.170
  3.220
  3.250
  3.290
  3.310
  3.340
  3.360
  3.380
  3.400
  3.410
  3.430
  3.440
  3.450
  3.460
  3.470
  3.480
  3.490
  3.500
  3.510
  3.510
  3.520
  3.530
  3.530
Adjusted equity ratio
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  935
  1,089
  1,255
  1,431
  1,619
  1,816
  2,024
  2,242
  2,469
  2,707
  3,375
  3,633
  3,901
  4,179
  4,468
  4,769
  5,081
  5,405
  5,743
  6,093
  6,458
  6,838
  7,233
  7,645
  8,075
  8,523
  8,990
  9,478
  9,987
  10,520
Depreciation, amort., depletion, $m
  1,807
  2,007
  2,224
  2,456
  2,704
  2,968
  3,246
  3,539
  3,847
  4,169
  3,928
  4,279
  4,644
  5,023
  5,418
  5,829
  6,255
  6,698
  7,159
  7,638
  8,136
  8,654
  9,193
  9,754
  10,339
  10,949
  11,585
  12,248
  12,941
  13,664
Funds from operations, $m
  2,742
  3,096
  3,478
  3,887
  4,323
  4,784
  5,270
  5,781
  6,316
  6,876
  7,304
  7,912
  8,545
  9,203
  9,887
  10,597
  11,336
  12,104
  12,901
  13,731
  14,594
  15,491
  16,426
  17,399
  18,414
  19,472
  20,575
  21,726
  22,928
  24,184
Change in working capital, $m
  -309
  -337
  -365
  -392
  -418
  -444
  -469
  -494
  -518
  -542
  -566
  -590
  -615
  -640
  -665
  -691
  -718
  -747
  -776
  -807
  -839
  -873
  -908
  -946
  -985
  -1,027
  -1,071
  -1,118
  -1,167
  -1,218
Cash from operations, $m
  3,051
  3,433
  3,843
  4,279
  4,741
  5,228
  5,739
  6,275
  6,834
  7,418
  7,870
  8,502
  9,159
  9,842
  10,552
  11,289
  12,054
  12,850
  13,677
  14,537
  15,432
  16,364
  17,334
  18,345
  19,399
  20,499
  21,646
  22,844
  24,095
  25,402
Maintenance CAPEX, $m
  -1,048
  -1,231
  -1,431
  -1,647
  -1,880
  -2,128
  -2,391
  -2,670
  -2,963
  -3,270
  -3,592
  -3,928
  -4,279
  -4,644
  -5,023
  -5,418
  -5,829
  -6,255
  -6,698
  -7,159
  -7,638
  -8,136
  -8,654
  -9,193
  -9,754
  -10,339
  -10,949
  -11,585
  -12,248
  -12,941
New CAPEX, $m
  -4,031
  -4,400
  -4,761
  -5,114
  -5,459
  -5,796
  -6,125
  -6,448
  -6,766
  -7,081
  -7,396
  -7,711
  -8,030
  -8,354
  -8,686
  -9,028
  -9,382
  -9,749
  -10,133
  -10,534
  -10,955
  -11,397
  -11,863
  -12,353
  -12,869
  -13,414
  -13,989
  -14,596
  -15,236
  -15,911
Cash from investing activities, $m
  -5,079
  -5,631
  -6,192
  -6,761
  -7,339
  -7,924
  -8,516
  -9,118
  -9,729
  -10,351
  -10,988
  -11,639
  -12,309
  -12,998
  -13,709
  -14,446
  -15,211
  -16,004
  -16,831
  -17,693
  -18,593
  -19,533
  -20,517
  -21,546
  -22,623
  -23,753
  -24,938
  -26,181
  -27,484
  -28,852
Free cash flow, $m
  -2,028
  -2,198
  -2,349
  -2,482
  -2,598
  -2,696
  -2,777
  -2,843
  -2,894
  -2,934
  -3,118
  -3,137
  -3,149
  -3,156
  -3,158
  -3,158
  -3,156
  -3,154
  -3,154
  -3,155
  -3,160
  -3,169
  -3,182
  -3,200
  -3,224
  -3,255
  -3,292
  -3,337
  -3,389
  -3,450
Issuance/(repayment) of debt, $m
  4,158
  4,527
  4,898
  5,261
  5,616
  5,963
  6,301
  6,634
  6,961
  7,285
  7,609
  7,933
  8,261
  8,595
  8,936
  9,288
  9,652
  10,030
  10,425
  10,837
  11,270
  11,725
  12,204
  12,708
  13,240
  13,801
  14,392
  15,016
  15,675
  16,370
Issuance/(repurchase) of shares, $m
  228
  158
  95
  18
  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 from financing (excl. dividends), $m  
  4,386
  4,685
  4,993
  5,279
  5,616
  5,963
  6,301
  6,634
  6,961
  7,285
  7,609
  7,933
  8,261
  8,595
  8,936
  9,288
  9,652
  10,030
  10,425
  10,837
  11,270
  11,725
  12,204
  12,708
  13,240
  13,801
  14,392
  15,016
  15,675
  16,370
Total cash flow (excl. dividends), $m
  2,358
  2,487
  2,644
  2,797
  3,019
  3,267
  3,524
  3,791
  4,067
  4,352
  4,491
  4,796
  5,112
  5,439
  5,778
  6,130
  6,496
  6,876
  7,271
  7,682
  8,110
  8,557
  9,022
  9,508
  10,016
  10,546
  11,100
  11,679
  12,285
  12,920
Retained Cash Flow (-), $m
  -1,162
  -1,247
  -1,349
  -1,450
  -1,547
  -1,643
  -1,736
  -1,828
  -1,918
  -2,007
  -2,096
  -2,186
  -2,276
  -2,368
  -2,462
  -2,559
  -2,659
  -2,763
  -2,872
  -2,986
  -3,105
  -3,230
  -3,362
  -3,501
  -3,648
  -3,802
  -3,965
  -4,137
  -4,319
  -4,510
Prev. year cash balance distribution, $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 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
  1,195
  1,240
  1,295
  1,348
  1,471
  1,624
  1,788
  1,963
  2,149
  2,344
  2,395
  2,610
  2,836
  3,071
  3,316
  3,571
  3,837
  4,112
  4,399
  4,696
  5,005
  5,326
  5,660
  6,007
  6,368
  6,744
  7,135
  7,542
  7,967
  8,410
Discount rate, %
  9.60
  10.08
  10.58
  11.11
  11.67
  12.25
  12.86
  13.51
  14.18
  14.89
  15.64
  16.42
  17.24
  18.10
  19.01
  19.96
  20.96
  22.00
  23.10
  24.26
  25.47
  26.75
  28.08
  29.49
  30.96
  32.51
  34.13
  35.84
  37.63
  39.51
PV of cash for distribution, $m
  1,091
  1,023
  957
  884
  847
  812
  767
  712
  651
  585
  484
  421
  359
  299
  244
  194
  151
  115
  85
  61
  43
  29
  19
  12
  8
  4
  3
  1
  1
  0
Current shareholders' claim on cash, %
  98.5
  97.6
  97.2
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1
  97.1

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 14.4
Price to Sales 1.7
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 10.4
Price to Free Cash Flow -21.8
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 $11763 million for the last fiscal year's total revenue generated by MGM Resorts International. The default revenue input number comes from 0001 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 17.5% 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 9.6%, 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 85.5%.

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 5.4% 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 195.9%.

Life of production assets of 22 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%. 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 - $6512.283 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 536.895 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 $14.9 billion.

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