Goldman Sachs Highlights MGM's Prowess in Share Buybacks
MGM Resorts Boosts Shareholder Value with Robust Buyback Program
MGM Resorts International is making a significant push to enhance shareholder value, with a strong focus on share repurchasing. The Nevada-based casino and entertainment giant has a robust $2 billion authorized buyback program, and according to recent reports, approximately $2.1 billion remains available for future buybacks [1][3][5].
In the third quarter of the previous year, MGM repurchased shares worth $572 million, and in Q2 2025, the company bought back 8 million shares for $217 million, reducing shares outstanding by 45% since 2021 [1][3][5]. This aggressive buyback strategy is part of a broader approach that also includes substantial capital investments, such as the ongoing MGM Grand room remodel and expansion in digital gaming.
The management, led by CEO Bill Hornbuckle and CFO Jonathan Halkyard, remains optimistic about future performance, signaling sustained confidence in share repurchases as a means to create value for shareholders. The company expects to enhance EBITDA by over $150 million during the year, supporting share repurchases [1][3][5].
Despite some short-term challenges like the MGM Grand remodel temporarily impacting EBITDA (estimated $65 million in total disruption) and concerns about Las Vegas Strip visitation, MGM’s diversified growth drivers, particularly BetMGM’s digital segment targeting $500 million in EBITDA, provide a solid foundation for sustained financial performance and capital return programs [1][3].
Analysts generally consider MGM shares moderately positive, with a consensus "Moderate Buy" rating and an average target price around $48.72, reflecting confidence in the company’s growth and capital return initiatives [2]. Vitaly Umansky of Seaport Global maintains a "Buy" rating with a target of $56.00, while Stephen Grambling from Morgan Stanley upgraded the stock to Equal-Weight with a target of $46.00 [2]. Ben Chaiken of Mizuho also gives a "Buy" rating with a target of $61.00 [2].
Schaeffer's Investment Research predicts a near-term rebound for MGM Resorts International, citing historical data indicating a 67% chance of the stock finishing higher with an average gain of 4.4% within a month [1]. The company's inclusion in the NASDAQ US BuyBack Achievers Index underscores its commitment to reducing shares outstanding and solidifies its position as a leader in shareholder value optimization within the gaming industry [1].
In the consumer discretionary sector, MGM stands out for its strong buyback performance, with a trailing 12-month yield buyback rate of 18% [1]. Despite a downturn in share repurchases among S&P 500 companies last year, MGM remained undeterred [1]. The total buyback tally for MGM in 2023 is $2.3 billion, with an additional $629 million repurchased in the fourth quarter [1].
Market observers anticipate a potential rebound in buyback activity for the current fiscal year, with signs indicating that other casino operators may follow MGM’s lead [1]. Goldman Sachs analyst David Kostin noted a modest 4% increase in cash spending by S&P 500 companies last year, despite a decline in buyback activity across the broader market [1].
Despite recent declines in MGM Resorts International's stock, analysts such as Vitaly Umansky of Seaport Global, Stephen Grambling from Morgan Stanley, Ben Chaiken of Mizuho, and Schaeffer's Investment Research remain optimistic about its future [1]. MGM's consistent share repurchasing has earned it a spot in Goldman Sachs' buyback basket [1]. However, the company has not reinstated its quarterly payout and instead focuses on maximizing shareholder value through stock repurchases.
The growth in cash spending was driven by a surge in research and development spending and a notable uptick in mergers and acquisitions [1]. Despite these increased expenses, MGM's buyback strategy is considered tax-efficient and a means of returning capital to shareholders, as opposed to traditional dividends [1].
In summary, MGM Resorts International is actively executing a large share repurchase program, with $2 billion authorized and $2.1 billion remaining for future buybacks. The company's strategy blends aggressive buybacks with significant capital investments, such as the ongoing MGM Grand room remodel and expansion in digital gaming. MGM's management remains optimistic about future performance, signaling sustained confidence in share repurchases as a means to enhance shareholder value.
- Directing their focus on personal finance, investors might consider MGM Resorts' robust $2 billion authorized share buyback program as a favorable opportunity for investing, given the company's strong financial position and the management's sustained confidence in enhancing shareholder value through share repurchases.
- The ongoing MGM Grand room remodel and expansion in digital gaming are part of MGM Resorts' broader business strategy, demonstrating the company's commitment to technology and its ambition to remain competitive in the gaming industry.
- The continued emphasis on share repurchases by businesses like MGM Resorts International, in conjunction with strategic capital investments, highlights the growing trend of using technology and finance to optimize personal-finance and boost shareholder value within the casino and gaming sectors.
