MGM Resorts Announces $2B Share Repurchase Program; Shares Gain 4%

MGM Resorts International (NYSE: MGM) has offered a reward to its shareholders in the form of a $2 billion share buyback program. Approved by the board of directors, the repurchase program has lifted investors’ sentiments about the company’s growth prospects.

Shares of MGM Resorts increased 4.3% to close at $43.73 on Wednesday.

Headquartered in Las Vegas, NV, MGM Resorts is the owner of casino resorts in the U.S. and Macau. Hotel, convention dining, retail, gaming, entertainment, and other facilities are provided in the company-owned resorts.

Inside the Headlines

Under the share buyback program, MGM Resorts will repurchase its shares via private transactions or from the open market at its discretion. The nature, value, and timing of the transactions are to be decided by the company and are contingent upon market conditions and laws related to securities, among other factors.

MGM Resorts communicated that it can start buyback under the $2 billion plan only after completing its previously authorized $3 billion repurchase program. This plan was authorized in February 2020 and has been exhausted to the extent of $2.5 billion through a buyback of 60 million shares. Beginning March 2022, the company was left to repurchase $524.6 million worth of shares under a $3 billion program.

Snapshot of MGM Resorts’ Shareholder-Friendly Policy

MGM Resorts have rewarded its shareholders handsomely through share buybacks over time. In the past three years, the company has executed $3.2 billion worth of share repurchases, with a $1.8 billion buyback in 2021.

To add to share buyback, MGM Resorts rewards shareholders through dividend payments. Its dividend payouts were $4.8 million in 2021, $77.6 million in 2020, and $271.3 million in 2019. The pandemic adversely impacted the company’s dividend payouts and share buybacks over the past two years.

Presently, the company’s annual dividend rate is $0.01 per share. In February 2022, MGM Resorts’ board of directors approved payment of a quarterly dividend of $0.0025 per share to shareholders of record as of March 10. The disbursement will be made on March 15.

Official Comment

MGM Resorts’ CFO, Jonathan Halkyard, said, “We remain committed to our capital allocation strategy and continue to believe that returning cash to shareholders is a highly productive use of our capital.”

Analysts’ Take

Recently, Truist Securities analyst Barry Jonas maintained a Holding rating on MGM Resorts, while lowering the price target to $51 (16.62% upside potential) from $54.

Wall Street is cautiously optimistic on MGM Resorts and has a Moderate Buy consensus rating based on 6 Buys and 5 Holds. The average MGM Resorts price target of $58 suggests 32.63% upside potential from current levels. Over the past year, shares of MGM Resorts have gained 12.7%.

Bloggers Opinion

Per TipRanks data, the financial blogger opinions are 85% Bullish on MGM, as compared to the sector’s average of 68%.

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