MGM – Market expectations are for Uniform ROA to expand to near historical highs, but management has concerns about Strip fundamentals, RevPAR, and demand in Vegas and Mandalay

• MGM Resorts International (MGM:USA)currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 25.1x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about Strip fundamentals, RevPAR, and demand in Vegas and Mandalay
• Specifically, management may have concerns about short-term booking rate pressure causing Strip revenues and margins to fall. Additionally, they may lack confidence in the sustainability of their increased Borgata slot revenue, and in their ability to achieve their RevPAR guidance. Moreover, they may be concerned about softness in the convention business affecting the Las Vegas market, and about the slow recovery of their Mandalay location following the shooting last year. Additionally, they may lack confidence in their ability to leverage tech investment to make their cash flows less capital intensive, and in the outlook for their MGM Springfield location