NEW YORK (TheStreet) -- MGM Resorts In'l. (MGM) - Get Report shares are down 1.9% to $22.42, falling into negative territory almost immediately after the company unanimously rejected the four board member nominations of activist investment group Land and Buildings Investment Management today.

The move sets up what could be a prolonged proxy battle between the casino operator and activist investor Jonathan Litt and his hedge fund, who vowed to continue to press for the election of its nominees.

"The board, as it is currently constructed, is very effective, independent, and diverse and has a broad range of expertise," an MGM spokesperson said today.

Land and Buildings, an investment management group which specializes in publicly traded real estate and real estate related securities, believes that the company's real estate holdings are substantially undervalued in public markets and that converting MGM's real estate holdings into a real estate investment trust would potentially more than double the stock's value to $55 per share.

MGM's stock shot up earlier this week following reports that the company was positively considering Land and Buildings' proposal. "We will carefully review Land and Buildings' proposal and their nominees to our board," an MGM spokesperson told Reuters yesterday.

TheStreet Ratings team rates MGM RESORTS INTERNATIONAL as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MGM RESORTS INTERNATIONAL (MGM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• 36.85% is the gross profit margin for MGM RESORTS INTERNATIONAL which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -14.34% is in-line with the industry average.
• MGM RESORTS INTERNATIONAL has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MGM RESORTS INTERNATIONAL continued to lose money by earning -$0.32 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus -$0.32).
• Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.5%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• The debt-to-equity ratio is very high at 3.46 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MGM maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 502.5% when compared to the same quarter one year ago, falling from -$56.81 million to -$342.26 million.
• You can view the full analysis from the report here: MGM Ratings Report

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