As a holder of both of these stocks I find it oddly amusing that Boyd stock is within $1.25 today of MGM. I cannot help but think any normal person wouldn't think for a minute that these two companies could be similarly valued by market standards and yet they are. I am aware of variables that make it so but if you just looked at the property holdings straight up in Vegas the average person would be incredulous.

Just a musing from me today as I saw Boyd was up $1 this morning.

 

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Also, Boyd is a profitable company with at least a P/E ratio and an EPS figure, whereas MGM is not profitable and has no P/E ratio and negative EPS. MGM also has the huge debt cloud hanging over it's head that impacts how much the stock can move higher as there is a lot of long term uncertainty regarding the prospects of the company regarding the paying down of the debt or the restructuring of the debt load. Macau also casts uncertainty on MGM's earnings, and Boyd does not have that exposure.

 

One other key factor missing is how many shares outstanding.

If there's half as many Boyd shares you're actually buying twice as much of the company for the same price.

 

MGM has 5x as many shares outstanding.

 

Their market caps aren't even close. Also, even though MGM loses money on a GAAP (generally accepted accounting principles) basis, they have a ton of assets and lots of EBITDA. EBITDA is an important metric in gaming because most of their assets consist of physical buildings and real estate. Buildings depreciate, which doesn't actually take cash off the balance sheet, but must be accounted for in GAAP earnings. This can make their businesses appear much worse than they are. In MGM's case, EBITDA - their cash flow - was $1.92 billion last year.

 

Excellent thread.