MGM vs. Las Vegas Sands: Which Casino Stock Is the Better Bet?

Key Points

• MGM generates the majority of its revenue in the United States, while Las Vegas Sands generates all its revenue in Asia.
• MGM reported Q3 record revenue and growth of 5.5%, while Las Vegas Sands recorded a 4.4% YoY drop in revenue.
• Las Vegas Sands has over 6 million sq ft of gaming and retail space, while MGM has 1.1 million sq ft of casino floors.

Casino and gaming stocks have been in recovery mode since the reopening after being hard hit by the COVID-19 pandemic. It's hard to believe, but the world's largest gaming destination, Macau, was only completely reopened in February of 2023 as China finally relaxed its zero-COVID restrictions after three years.  

In the meantime, MGM Resorts International Inc. NYSE: MGM has grown to operate nearly half the major casinos in Las Vegas. At the same time, Las Vegas Sands Co. NYSE: LVS continues to focus solely on the Asian markets. The stocks have opposite year-to-date (YTD) performance, with MGM trading down 18.5% and LVS trading up 10.7% YTD. As the year comes to a close, investors may wonder which stock is the better bet heading into 2025. Let's take a look.

MGM Resorts: A Leading Force in Las Vegas and Beyond

MGM Resorts: A Leading Force in Las Vegas and BeyondLas Vegas is dominated by two major casino groups, MGM Resorts and Caesars Entertainment Inc. NASDAQ: CZR. MGM operates a total of 18 U.S. and Macau properties. It owns and operates 10 of the largest Las Vegas casino resorts, including Bellagio, MGM Grand, Mandalay Bay, Luxor, Excalibur, The Cosmopolitan, and Aria. In Las Vegas, MGM has a total of 20 entertainment venues, 325 food and beverage outlets, 37,000 hotel rooms, 1.1 million sq ft of casino floors, and 4 million sq ft of convention space. Considering most of its revenue is generated in the U.S., MGM’s performance can be impacted by consumer discretionary sector spending.

It’s BetMGM is a digital sportsbook and iCasino app that lets users in 29 states in the U.S. and 11 jurisdictions in Europe, Canada and South America make real-time bets and wagers. MGM is planning to develop an integrated resort in Japan and Dubai.

Soaring Record Revenues, But Still Missing Q3 Estimates

MGM Resorts reported a third quarter of 2024 EPS of 54 cents, missing consensus estimates by a penny. Consolidated revenues grew 5.3% YoY to a record $4.18 billion but still falling short of the $4.21 billion consensus estimates.

• Its Las Vegas resorts generated a 1% YoY increase in net revenue to $2.1 billion, driven by an increase in non-gaming revenue as casino revenue fell 13% YoY to $476 million. In comparison, room revenue rose 7% YoY to $743 million. The slots win rose 4% YoY to $554 million. Revenue per available room (RevPAR) rose 6% to $229. Occupancy rates improved to 94% from 92% last year. The average daily rate (ADR) hit a new record in Q3.
• MGM China posted record revenue and record property EBITDAR. Casino revenues surged 12% YoY to $800 million, with main floor table games wins rising 21% YoY to $858 million. It also grew its market share by 15% YoY.
• BetMGM recorded profits again with record iGaming results and a 70% YoY jump in first-time deposits.

The stock fell 11% following the earnings report. It fell further with the release of the Macau Gaming Inspection and Coordination Bureau (MGICB) report of 6.6% gross gaming revenue (GGR) growth to $2.6 billion, which was up 20% sequentially from September and was the highest since the pandemic. This was on top of the 400% YoY growth in the same period last year, indicating that growth is moderating. Macau GGR YTD growth is up 28.1% YoY to $22.7 billion.

The consensus analyst price target is $53.15, representing a 46% upside. MGM trades at 14.86x forward earnings.

Las Vegas Sands: Betting on International Growth  

Despite the name, Las Vegas Sands Co. NYSE: LVS doesn’t own or operate any more casinos in Las Vegas or even the United States for that matter. They sold the last of their U.S. properties in 2021 to focus solely on their Asian properties in Macau and Singapore. Unlike BetMGM, Las Vegas Sands doesn’t have or promote an online betting app.

Las Vegas Sands is heavily invested in Macau, with five integrated resorts: The Venetian, The Londoner Macao, The Parisian Macao, The Plaza Macao & Four Seasons Hotel Macao, and The Sands Monaco. It also operates the Marina Bay Sands in Singapore. The properties have 12,136 rooms and over 6 million sq ft of gaming and retail space, and 3 million sq ft of meeting space.

Momentum Slides in Q3, But Authorizes a $2 Billion Stock Buyback

Las Vegas Sands reported Q3 2024 EPS of 44 cents, missing consensus estimates by 9 cents. Revenue slid 4% YoY to $2.68 billion which also fell short of the $2.79 billion consensus estimates. Consolidated adjusted property EBITDA fell to $991 million from $1.12 billion last year. Casino revenues fell 3.6% YoY to $1.94 billion. Food & Beverage revenue fell 2.6% YoY to $152 million.

The Board of Directors authorized a $2 billion stock buyback and raised the annual dividend to $1.00 per share. Incidentally, the stock rallied on the news, which was likely driven by the stock buyback announcement.

The consensus analyst price target is $57.92, representing a 12% upside. LVS trades at 22x forward earnings.

MGM Is the Underdog Bet

Considering MGM continued to grow its revenues by 5.5% YoY while LVS saw its revenue sink by 4% YoY, MGM is still experiencing growth. MGM is also trading at a lower forward PE of 14.96 versus 22. Its consensus price target also has more upside at 46% versus 11% for LVS. MGM grew its market share in Macao by 15% in Q3. Despite having better Q3 results, MGM is still trading down 18.5% on the year, which indicates more upside potential when sentiment improves.