Is MGM Resorts a Buy After Q2 Earnings: Balancing Strong Digital Growth with Las Vegas Softness?

In the aftermath of its Q2 2025 earnings report, MGM Resorts International finds itself at a crossroads. The company's results—$4.4 billion in consolidated net revenues, up 2% year-over-year—were a mixed bag. While digital and international segments surged, the Las Vegas Strip, the crown jewel of the business, continued to struggle. For investors, the question is clear: Can the momentum in digital gaming and global expansion offset the near-term headwinds in the core Las Vegas market?

The Digital and International Tailwinds

MGM's digital segment, including its BetMGM joint venture, delivered a 14% year-over-year revenue increase to $163.9 million. This growth was fueled by strong performance in online sports betting and iGaming, particularly in the U.S. and the Netherlands. The BetMGM venture, now a critical pillar of the company's strategy, has upgraded its full-year 2025 guidance, signaling confidence in its ability to scale.

Meanwhile, MGM China, the company's largest international segment, reported a 9% revenue increase to $1.1 billion, driven by higher table games drop and improved VIP win percentages. Regional operations also saw a 4% revenue rise, supported by higher casino revenue. These results highlight the company's ability to diversify its revenue streams beyond Las Vegas, a strategic shift that could prove vital in a post-pandemic world where travel patterns and consumer behavior are still evolving.

The Las Vegas Challenge

The Las Vegas Strip Resorts segment, however, remains a drag. Net revenues declined 4% to $2.1 billion, attributed to the impact of room remodels at the MGM Grand and a drop in table games hold. While management cited progress on the $200 million room renovation project as a long-term growth driver, the near-term pain is undeniable. Convention bookings, a key revenue lever, are showing promise, but the market is still skeptical about the segment's ability to rebound quickly.

The disconnect between digital optimism and Las Vegas pessimism is reflected in the stock's valuation. At a trailing P/E of 16.91—well below the industry median of 21.56—MGM trades at a discount to peers. Analysts argue the stock is undervalued, with an average price target of $46.46 implying a 18.57% upside. Yet, the high debt load (177.1% debt-to-equity) and insider selling activity—$1.4 million in shares sold by the COO in May 2025—cast a shadow over the bullish case.

Strategic Initiatives: A Path to Rebalance?

MGM's $2.1 billion remaining share repurchase program and $150 million in projected EBITDA enhancements this year signal management's confidence in unlocking value. The company is also accelerating digital investments, with BetMGM targeting profitability by 2026. These moves are critical, as the digital segment currently operates at a $26 million adjusted EBITDAR loss.

The key question is whether these initiatives can offset the drag from Las Vegas. The answer lies in execution. If the MGM Grand remodel and convention bookings gain traction by late 2025, the segment could stabilize. Meanwhile, digital growth, if sustained, could become a profit engine rather than a cost center.

A Calculated Bet for Investors

For long-term investors, the case for MGM rests on its transformative potential. The company is transitioning from a Las Vegas-centric model to a diversified portfolio that includes digital gaming, international markets, and luxury hospitality. While the near-term risks are real—high debt, soft Las Vegas demand, and digital underperformance—the long-term rewards could justify the current discount.

However, caution is warranted. The stock's 177.1% debt-to-equity ratio and recent insider selling suggest management is not fully aligned with shareholders. Investors should monitor the progress of the Las Vegas turnaround and BetMGM's path to profitability. A key inflection point will be the completion of the MGM Grand remodel in late 2025 and the company's ability to meet its EBITDA enhancement targets.

Final Verdict

MGM Resorts is a stock of contrasts: a digital success story masking a struggling core business. At $37.88, it trades at a 21.6% discount to intrinsic value, supported by analyst optimism and a robust buyback program. But the road to recovery hinges on balancing the momentum in digital and international markets with a revival in Las Vegas.

For those willing to take a measured risk, the current valuation offers an opportunity to invest in a company with a clear vision for transformation. Yet, for the more risk-averse, patience may be the better strategy—until the Las Vegas question is resolved. In the end, the answer to “Is it a buy?” may depend on whether you believe in the power of a digital renaissance to outshine the neon of the Strip.