MGM Resorts Bets Big on Nevada Solar, But Can Green Power Spark a Stock Revival?

LAS VEGAS – MGM Resorts International (NYSE: MGM) is plugging its famed Las Vegas Strip properties into a significant new source of clean energy. The hospitality and entertainment giant has begun drawing 115 megawatts of solar power and 400 megawatt-hours of battery storage from the newly operational Escape Solar and Storage Project in Nevada. The move is designed to cover the daytime electricity needs of its sprawling Strip portfolio, marking a substantial step in the company's broader environmental, social, and governance (ESG) commitments.

This green energy pivot arrives at a nuanced moment for MGM's stock. Shares recently traded around $33.34, showing a modest 90-day gain of just over 4%. However, this short-term momentum contrasts with a one-year total shareholder return that remains in negative territory, down approximately 3.5%. The divergence highlights a key question for investors: is the market underestimating the long-term value of MGM's strategic investments in sustainability and global expansion, or are near-term headwinds justifiably capping its price?

Analysts are divided. Some valuation models, which project future cash flows and account for growth initiatives, suggest a fair value closer to $42.56 per share—implying a potential upside from current levels. This optimistic view hinges on successful execution of growth plans, including integrated resort projects in markets like Osaka and Dubai, and the anticipated margin benefits from fixed-cost energy sources like solar.

Yet, other metrics paint a more cautious picture. MGM's price-to-earnings (P/E) ratio stands near 135.7x, a stark premium compared to the US hospitality industry average of about 21.5x and a peer median of 15.5x. This elevated multiple suggests the market may already be pricing in a significant future earnings recovery, leaving little room for error. The company also faces watchpoints, including the capital-intensive nature of its international projects and potential volatility in consumer travel patterns, which could pressure financial flexibility.

The Escape Solar deal itself is more than a utility contract; it's a strategic hedge. By locking in a large portion of its power needs from a renewable source, MGM aims to mitigate long-term exposure to fossil fuel price volatility—a growing concern for energy-intensive industries. For a company whose Las Vegas operations alone consume enough electricity to power a small city, this translates into potential future cost stability and a strengthened sustainability profile appealing to a growing segment of consumers and investors.

Voices from the Financial Community

David Chen, Portfolio Manager at Horizon Sustainable Fund: "MGM's solar commitment is a textbook case of operational hedging done right. It's a capital-efficient way to de-risk the income statement from energy shocks. While the P/E looks stretched, we value it on future cash flow from stabilized assets. The Osaka and Dubai pipelines are transformative, and the market isn't fully valuing that optionality yet."

Rebecca Vance, Senior Analyst at Clearwater Research: "The optics are good, but the financials are messy. A P/E over 135x is indefensible in a sector facing margin pressure. This solar deal is a cost, not an immediate profit center. Investors are paying a premium for hope—hope that international projects get built on time and that Las Vegas visitation remains robust. That's a lot of hope priced in."

Marcus Thorne, Independent Investor and Casino Industry Blogger: "Finally! A major player actually walking the walk on green energy. This isn't just a PR stunt; it's smart business. The naysayers focusing solely on the P/E are missing the forest for the trees. In five years, we'll look back at this solar deal as the moment MGM secured its cost base and its social license to operate. The stock's short-term wobble is a buying opportunity."

Anya Petrova, Risk Analyst at Sterling Capital: "The valuation gap is a mirage. The so-called 'fair value' models rely on aggressive margin expansion and flawless global execution. Between geopolitical risks in new markets and the sheer debt required to build these resorts, the downside is substantial. The solar move is positive, but it's a minor footnote against these massive, cash-guzzling projects that could dilute shareholders for years."

This analysis is based on publicly available data and analyst commentary. It is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor.