MGM Resorts’ Strategic Buyback Dominance Wins Goldman Sachs Approval


In a rigorously competitive industry, MGM Resorts International continues to maintain a strategic edge over its rivals. Dominating the consumer discretionary subgroup in the Goldman Sachs buyback basket, the financial giants affirmed their confidence in the casino gaming powerhouse. MGM’s calculated move to repurchase its own shares accentuates the company’s long-standing commitment to maintaining shareholder value.

Renowned for operating illustrious entertainment destinations such as the Bellagio and Excalibur on the Las Vegas Strip, MGM’s strategic efforts have earned it a rare place in the consumer cyclical space. Goldman Sachs employs metrics such as trailing 12-month yield buyback to evaluate the merits of inclusions on their coveted list. MGM passed with flying colors, boasting an impressive 18% — an achievement only outdone by General Motors.

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Despite last year witnessing a substantial 13% decrease in share repurchase activity among S&P 500 firms courtesy of soaring interest rates and tax stipulations, MGM staged a robust beginning to 2024. Analysts at Goldman Sachs point out potential obstacles in the road ahead, such as high valuations, a steep climb in interest rates, and a 1% excise tax on buybacks. Regardless, they forecast MGM as a potential standout in the buyback domain this year.

MGM’s commitment to share repurchases has been remarkable in a consistent manner over the years. During 2023’s third quarter, MGM invested $572 million to buy back its shares and unveiled an ambitious $2 billion buyback program. They followed up by buying back $629 million of their shares in Q4, amassing a total of $2.3 billion for the year.

In an announcement this February, MGM’s CFO, Jonathan Halkyard, revealed that the company had already repurchased $249 million worth of its shares – a figure that brings its total to a whopping $7.1 billion since 2021. It’s worth noting that MGM’s strategy presents a more tax-efficient alternative to dividends, an avenue the operator has shied away from since the onset of the COVID-19 pandemic – a stark contrast to its competition.

Goldman Sachs analyst David Kostin expounded that even while compensating for the 13% dip in buybacks, S&P 500 firms increased their cash spending by 4% to $3.4 trillion. This heightened spending was buoyed by research and development investments proliferating by 10%, a 4% enhancement in dividends, and a 34% surge in expenditures allocated to mergers and acquisitions.

As we look towards the rest of the year, MGM’s trend of persistently rewarding its shareholders sets a promising tone for the industry. Even as several market observers anticipate a revival in the scope of buybacks this year, it remains evident that other casino operators are eager to follow in MGM’s formidable footsteps.

In addition to its inclusion in the Goldman Sachs buyback basket, MGM also boasts membership in the NASDAQ US BuyBack Achievers Index. This requires holdings to decrease their outstanding share count by a minimum of 5% over the trailing 12 months; a testament to MGM’s unwavering commitment to shareholder value and preferred standing among its industry peers.