- Buys
- 0 of 4
- Three are needed, so it stays out of the basket.
- Price to free cash flow
- 4.9x
- $1.49B of trailing free cash flow, already after rent, against a $7.29B market cap.
- Operating lease liabilities
- $23.88B
- Nearly four times the $6.07B of tagged long-term debt at June 30, 2026.
- People Inc.'s stake
- 26.5%
- The holder that withdrew its take-private proposal on September 23, 2026.
Quality, long holding periodsReal cash and a shrinking share count, but owner earnings it cannot measure.
Deep value, margin of safetyAnchors on net income and finds no margin of safety.
Macro and reflexivityCheap enough, but every rate and spread print is moving the wrong way.
GrowthA buyback story with a stalled physical footprint.
Session of October 15, 2026. Four of four seats voted, no two on the same model. MGM Resorts has not been reviewed before.
Bottom line
On reported cash, MGM Resorts is the cheapest large US casino operator. Our arithmetic says the market cap is consistent with free cash flow shrinking by roughly 12% to 15% a year for a decade. All four seats expect more than that in year three. None voted Buy.
The seats disputed whose cash it is, not whether it exists. MGM rents most of its buildings, part of its cash belongs to MGM China's outside holders, and its largest shareholder has just walked away from buying the rest.
The first test is the third-quarter release, scheduled for October 28, 2026.
The business in 60 seconds
MGM reports four segments. In the quarter to June 30, 2026, the Las Vegas Strip carried 49% of segment revenue, MGM China 25%, Regional Operations 21% and MGM Digital 4% (10-Q, filed July 29, 2026). BetMGM, a 50/50 venture with Entain, is not consolidated.
Most Strip and regional real estate is leased, and rent is paid inside operating cash flow. In Macau, the government can terminate the concession, redeem it from its eighth year, or refuse an extension (10-K, filed February 11, 2026).
People Inc., formerly IAC, holds about 66.8M shares (Schedule 13D/A, filed September 24, 2026). An April 2026 voting agreement gives it two board designees while its group holds 17.5% or more (8-K, filed April 7, 2026).
| Fiscal year | Revenue | Operating margin | Free cash flow | Diluted shares |
|---|---|---|---|---|
| 2021 | $9.7B | 23.7% | $882.7M | 487.4M |
| 2022 | $13.1B | 10.7% | $991.4M | 413.0M |
| 2023 | $16.2B | 11.7% | $1.8B | 358.6M |
| 2024 | $17.2B | 8.7% | $1.2B | 310.2M |
| 2025 | $17.5B | 5.7% | $1.46B | 277.3M |
10-K figures from SEC EDGAR. Operating margin is our division of filed operating income by revenue; 2021 to 2023 include one-off real estate and transaction items.
What changed
- The bid is gone. People withdrew its non-binding proposal to buy every share it does not own and said it remains open to a strategic transaction (13D/A Amendment No. 9, filed September 24, 2026).
- What the bid promised. The June 1, 2026, letter proposed an all-cash take-private and said People would not back a change of control to anyone else (13D/A Amendment No. 8, Exhibit 99.1). The September amendment did not repeat that.
- Macau refinanced at 6.25%. MGM China sold $750M of notes due 2033 on May 13, 2026, with a holder put tied to the status of its Macau operations (8-K, filed May 14, 2026).
- Peers split. Caesars' Las Vegas segment revenue fell 3.5% while its Regional segment rose 9.4% (10-Q, filed July 28, 2026). Las Vegas Sands' operating income fell 21.1% (10-Q, filed July 24, 2026).
- Rates moved against the equity. The 10-year yield reached 5.21% and the high-yield spread widened 51 basis points to 3.16% in 30 days (FRED, October 13, 2026).
The bull case on MGM Resorts
- The cash recurs. Free cash flow ran between $1.2B and $1.8B in each of the last three fiscal years, after rent and capital spending.
- The share count keeps falling. Four years of buybacks, $7.65B in all, cut diluted shares by 43.1%.
- The Strip took share. It grew while the closest peer's Las Vegas segment shrank.
- BetMGM says it is cash positive and on track for its 2026 guidance (BetMGM release, October 13, 2026).
The withdrawal removed a bid, not the holder, the seats, or the stated openness to a transaction
Investor C, Watch
Opinion: my earnings anchor may be too punitive.
Investor B, Avoid, on its own weak point
The bear case on MGM Resorts
- The landlord sits first. Rent does not flex with revenue. Equity is $2.51B and tangible book is negative $3.51B.
- Part of the cash is not MGM's. In fiscal 2025, $315.0M of net income belonged to MGM China's outside holders, and $169.2M was paid to them (10-K, filed February 11, 2026). Consolidated free cash flow counts all of it.
- Macau is a licence, not an asset. A quarter of revenue depends on a concession the government can end.
- Maturities come before buybacks. $1.15B of principal was due within 12 months of December 31, 2025, and $1.43B in the year after.
In my opinion, the landlord owns most of the moat and the operator keeps the residual.
Investor A, Watch
Physical expansion runway in the United States is essentially tapped out.
Investor D, Watch, on why buybacks carry the case
Where the committee splits
Three seats voted Watch and one Avoid. The split is over which line of the accounts to believe.
Is MGM earning $206M or $1.49B?
| Position | Seats | The figure it rests on |
|---|---|---|
| Net income is the anchor, and it is expensive | B | Net income, fiscal 2025: $205.86M (10-K) |
| Cash after rent is the anchor, and it is cheap | A, C, D | Free cash flow, trailing twelve months: $1.49B (10-Q) |
Part of the gap is the minority: net income is after the $315.0M owed to MGM China's outside holders, free cash flow before it. The rest sits in non-cash charges our sheet did not break out.
What settles it. Free cash flow less the minority's share of earnings in the fiscal 2026 10-K, against Investor A's $1.2B attributable bar and Investor B's $1.05B of verified owner earnings.
From the chair, to Investor B. Which line in the fiscal 2026 10-K would move your anchor from net income to cash flow?
From the chair, to Investor A. With $315.0M of minority earnings set against $1.49B, does attributable cash clear your $1.2B bar or confirm Watch?
Do the leases count twice?
| Position | Seats | The figure it rests on |
|---|---|---|
| Rent is already paid, so counting leases again is double counting | C | Rent inside operating cash flow (10-K) |
| Leases are the core risk because they do not shrink in a downturn | A, D | Operating lease liabilities: $23.88B (10-Q) |
pricing the leases as debt and then discounting the post-rent residual again is, in my judgment, double counting (opinion).
Investor C
What settles it. Strip segment revenue in the September-quarter 10-Q, due by November 9, 2026.
From the chair, to Investor C. If Strip revenue stays positive while the high-yield spread keeps widening, does operating evidence ever outrank the regime?
From the chair, to Investor D. Your base case puts $1.50B of free cash flow in year three on 1.5% growth. What growth turns a business at 4.9 times free cash flow into a growth-seat Buy?
| Investor | Verdict | What breaks its thesis |
|---|---|---|
| A | Watch 6 | Strip revenue down over 3% in the third-quarter 10-Q, or fiscal 2026 free cash flow below $1.0B: Avoid. |
| B | Avoid 7 | Normalised parent earnings of $729M, or verified owner earnings of $1.05B, in the fiscal 2026 10-K. |
| C | Watch 6 | Strip revenue negative in the September and December 2026 quarters, trailing free cash flow below $1.4B, or the high-yield spread beyond 4.50% while fed funds rises. |
| D | Watch 7 | Fiscal 2026 free cash flow below $1.0B, or MGM Digital growth below 5% in the third-quarter 10-Q. Critical environment: US leisure spending. |
Valuation
What the price requires. This is the desk's arithmetic; the seats never saw it. At 9.71%, the 10-year yield plus 4.5 points, the market cap fits trailing free cash flow falling 13.3% a year for ten years, then growing 3%. Year three lands at $975M. At 8.71% it is $923M; at 10.71%, $1.02B. The discount rate is our choice, so the hurdle is a band.
Consolidated cash overstates what shareholders own. Taking fiscal 2025 minority earnings off the trailing figure leaves about $1.18B, and on that base the band falls to $819M to $912M of attributable cash. The seats wrote their scenarios on the consolidated figure, without the minority number, so the chart uses the consolidated band.
The cash yield is about 13.8% on a $10.8B enterprise value that counts debt but not leases, against a 10-year yield of 5.21%.
Hatched bars: what the market cap requires at three discount rates. Seat bars: each seat's probability-weighted year-three free cash flow, consolidated.
| Investor | Bear | Base | Bull | Weighted, year 3 | Against the price |
|---|---|---|---|---|---|
| A | 30%, $0.8B | 50%, $1.4B to $1.6B | 20%, $2.0B | $1.39B | above the band |
| B | 35%, $0.60B | 45%, $1.40B | 20%, $2.00B | $1.24B | above the band |
| C | 30%, $1.0B | 45%, $1.5B | 25%, $1.9B | $1.45B | above the band |
| D | 30%, $0.75B | 50%, $1.50B | 20%, $2.10B | $1.40B | above the band |
Investor A gave a base-case range; the weighted column uses its midpoint. MGM's latest results release carried no numerical guidance.
Every seat sits above the band. Each said why that was not enough. Investor A: "the owner earnings that actually belong to MGM shareholders cannot be measured from this sheet". Investor B: "the apparent cash-flow bargain does not establish a margin of safety because cash flow attributable to MGM shareholders is not available". Investor C: "the price is right and the clock is wrong; I wait for the inflection, not the story." Investor D wants organic growth to reaccelerate first.
| Investor | Entry discipline |
|---|---|
| A | Enterprise value, leases excluded, at 5 times consolidated free cash flow or less, attributable cash at least 75% of it |
| B | 7 times verified normalised owner earnings or less |
| C | A 20% free cash flow yield with high-yield spreads narrowing over 30 days; mid-20s if they are still widening |
| D | Price to free cash flow below 3.5 times, or organic growth above 5% with high-yield spreads below 2.50% |
Comparables
| Company | Market cap | Growth, last FY | Operating margin | P/E | FCF yield |
|---|---|---|---|---|---|
| MGM Resorts (MGM) | $7.3B | 1.7% | 5.7% | 17.1x | 20.5% |
| Caesars (CZR) | $6.0B | 2.1% | 16.2% | n/a | 10.2% |
| Wynn Resorts (WYNN) | $7.6B | 0.1% | 15.7% | 16.9x | 10.4% |
| Las Vegas Sands (LVS) | $24.0B | 15.2% | 21.6% | 13.9x | 11.3% |
| Boyd Gaming (BYD) | $5.1B | 4.1% | 18.3% | 2.8x | 0.7% |
SEC filings and Yahoo Finance prices, one method for all five. Caesars has a trailing net loss, so no P/E.
MGM has the thinnest margin and the fattest cash yield for one reason: its rent sits above the operating line, while owners of buildings carry that cost as debt and depreciation. Boyd's P/E and cash yield look distorted by one-off items we did not trace.
Key risks
Ranked by the desk; Raised by names each source.
| Risk | Why it matters | Raised by | First signal |
|---|---|---|---|
| High. Fixed rent against a demand slowdown | Rent does not flex and the equity is a thin slice | 10-K Item 1A; Analyst; Investors A and D | Strip revenue down over 3% in the third-quarter 10-Q |
| High. Macau concession and capital controls | A revocable licence; dividends to the parent could be blocked | 10-K Item 1A; Analyst; Investors A, B and C | Any 8-K on the concession or the 2033 note put |
| High. US leisure demand | Regional revenue is shrinking | Investors B and D; Analyst; forum (unverified) | Strip and Regional both negative in one quarter |
| Medium. Cash that belongs to others | Minority earnings and unquantified BetMGM payouts blur owner earnings | Investors A and B; Analyst; desk arithmetic | Fiscal 2026 10-K minority line |
| Medium. Refinancing at higher rates | Maturities compete with buybacks | 10-K Item 1A; Investor C; Analyst | High-yield spread beyond 4.50% |
| Medium. A 26.5% holder with no stated plan | Floor or overhang | Analyst; Investor C | A new 13D/A, or the stake below 17.5% |
None of these is resolved by the filings we read.
What to watch
| Date | Event | What it decides |
|---|---|---|
| October 28, 2026 | Third-quarter results (BetMGM release, October 13, 2026) | Strip direction |
| November 9, 2026 | Third-quarter 10-Q, SEC deadline | Investor A's Strip line, Investor C's $1.4B cash line, Investor D's digital line |
| Ongoing | People Inc. 13D/A filings, EDGAR | Buyer, seller or neither |
| Monthly | High-yield spread, FRED | Investor C's 4.50% line |
| March 1, 2027 | Fiscal 2026 10-K, SEC deadline | Attributable cash against Investors A and B |
Our Charter review faced the same gap between an equity yield and a whole-company yield.
Owning it onchain
Two tokenized versions exist. We have not judged whether either is investable: we checked before regular US trading opened on October 15, 2026, when market makers quote thinly or not at all.
Data
| Item | Figure | Source |
|---|---|---|
| Share price used for market cap | $28.96, October 14, 2026 | Yahoo Finance |
| Shares outstanding | 251,592,756 at July 27, 2026 | 10-Q cover, filed July 29, 2026 |
Method. Four investors with different philosophies, each on a different AI model, read one identical fact sheet and voted independently. A name needs three Buys to enter a basket. How the committee works.
Correction. This article first said neither token was investable, on a missing quote for the xStocks token and a 6.32% round-trip cost for Backpack's. Both were checked before regular US trading opened, when market makers quote thinly or not at all. We now judge that cost only during regular US market hours, and we have removed the figure and the verdicts.
As of October 15, 2026, BagsCapital manages no outside capital and holds no position in MGM Resorts. Nothing here is investment advice.