Value
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 9.9 |
| EV/EBITDA | 1.4 |
| Fwd P/E | 6.1 |
| PEG | 9.3 |
| Analyst target | 5.0 |
- ▸Forward P/E: 21.3x
- ▸PEG: 0.61
MGM · Why this verdict
Why MGM Resorts International (MGM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Exceptional free cash conversion and above-average technical positioning are insufficient to overcome a stretched balance sheet, inconsistent earnings delivery, and negative risk/reward geometry after the stock exceeded its analyst price target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Consensus analyst targets imply the stock has already surpassed fair value by approximately 14%, leaving no upside cushion and making the risk/reward unfavorable for initiating or adding to positions. Warnings | Analyst consensus price target is revised upward by more than 15% within 2 quarters, restoring meaningful headroom to a new entry. | →Stable |
| CounterRSI at 78 suggests near-term overbought conditions that may correct before a broader re-rating — a pullback alone would not invalidate the thesis if underlying business trends improve. | ||
A debt-to-equity ratio of 9.5 represents elevated financial leverage that limits balance sheet flexibility and amplifies downside sensitivity to any deterioration in operating cash flows. Bear case | Debt-to-equity ratio declines below 6.0 over the next four quarters through debt paydown or equity-building earnings. | →Stable |
| CounterFree cash flow running at 290% of reported net income provides a meaningful debt-service buffer, suggesting the leverage may be manageable if operating cash generation is sustained. | ||
Free cash flow at 290% of reported net income indicates the business generates substantially more cash than earnings reflect, providing capacity to service debt and return capital. Quality breakdown | Free cash flow remains above 200% of net income for 4 consecutive quarters. | →Stable |
| CounterNo competitive moat is identified, meaning cash flows depend entirely on sustained operating execution without a structural defense, making the 290% ratio less durable than it would be in a defensible franchise. | ||
The earnings record shows two beats and two misses over the last four quarters, including recent misses, signaling unreliable earnings delivery that undermines the investment case. Catalyst breakdown | EPS surprise remains positive and exceeds 5% for 3 consecutive quarters. | →Stable |
| CounterThe average surprise across all four quarters is strongly positive at more than 57%, driven by a 209% beat in one quarter, which may overstate the persistence of miss risk relative to the actual earnings trajectory. | ||
Consensus analyst targets imply the stock has already surpassed fair value by approximately 14%, leaving no upside cushion and making the risk/reward unfavorable for initiating or adding to positions.
→StableWarnings
- Expectation
- Analyst consensus price target is revised upward by more than 15% within 2 quarters, restoring meaningful headroom to a new entry.
CounterRSI at 78 suggests near-term overbought conditions that may correct before a broader re-rating — a pullback alone would not invalidate the thesis if underlying business trends improve.
A debt-to-equity ratio of 9.5 represents elevated financial leverage that limits balance sheet flexibility and amplifies downside sensitivity to any deterioration in operating cash flows.
→StableBear case
- Expectation
- Debt-to-equity ratio declines below 6.0 over the next four quarters through debt paydown or equity-building earnings.
CounterFree cash flow running at 290% of reported net income provides a meaningful debt-service buffer, suggesting the leverage may be manageable if operating cash generation is sustained.
Free cash flow at 290% of reported net income indicates the business generates substantially more cash than earnings reflect, providing capacity to service debt and return capital.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 200% of net income for 4 consecutive quarters.
CounterNo competitive moat is identified, meaning cash flows depend entirely on sustained operating execution without a structural defense, making the 290% ratio less durable than it would be in a defensible franchise.
The earnings record shows two beats and two misses over the last four quarters, including recent misses, signaling unreliable earnings delivery that undermines the investment case.
→StableCatalyst breakdown
- Expectation
- EPS surprise remains positive and exceeds 5% for 3 consecutive quarters.
CounterThe average surprise across all four quarters is strongly positive at more than 57%, driven by a 209% beat in one quarter, which may overstate the persistence of miss risk relative to the actual earnings trajectory.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.3 |
| ROA | 1.2 |
| Gross margin | 4.8 |
| Op margin | 2.7 |
| Net margin | 1.2 |
| Current ratio | 5.0 |
| FCF quality | 10.0 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 206% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
2.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.7 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 1.6 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 1.3 |
- ▸Uptrend pullback (RSI 34) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 7.1 |
| erm sentiment | 5.4 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 9.8 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $256,587 (0.002% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.6 |
| quality rank | 4.3 |
| growth rank | 3.3 |
Technical
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.6 |
| support resistance | 7.9 |
| 52w position | 7.1 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 2.5 |
| volatility | 6.8 |
| put call | 9.8 |
| implied vol | 4.9 |
| max pain risk | 3.0 |
| beta | 5.8 |
| debt equity | 0.0 |
- ▸Short squeeze setup: 17% short, quality 7.5
- ▸Above max pain $40
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:73d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.6<1.5@spot
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
0.64
Upside
+3.2%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.6<1.5@spot) reinforce the read. Current asymmetry R:R is 0.64 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.5, Insider at 7.3, and Sentiment at 6.8; the weakest are Growth at 2.7, Peer rank at 2.8, and Quality at 4.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.64 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Analyst Target Exceeded No Upside
Trip ifAnalyst consensus price target rises more than 15% above current price for 2 consecutive months.
- P2High Leverage Balance Sheet Risk
Trip ifDebt-to-equity ratio falls below 6.0 for 2 consecutive quarters.
- P3Strong Free Cash Conversion
Trip ifFree cash flow falls below 150% of net income for 2 consecutive quarters.
- P4Inconsistent Earnings Delivery
Trip ifEPS surprise exceeds 5% for 3 consecutive quarters.