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Melco Resorts & Entertainment (MLCO)
NASDAQ:MLCO
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Melco Resorts & Entertainment
(NASDAQ:MLCO)43Neutral
Positive Factors
Financial Strategy
The company is focused on an asset-light strategy to reduce debt, with major capital expenditures coming to an end.
Market Share Gains
MLCO is expected to continue gaining market share with the opening of 'House of Dancing Water' in May 2025.
Negative Factors
Operating Expenses
Melco surprised with higher operating expenses than expected, which may impact its ability to maintain market share until these expenses are reduced.
Melco Resorts & Entertainment (MLCO) vs. S&P 500 (SPY)
Market Cap
$2.41B
Dividend YieldN/A
Average Volume (3M)4.14M
Price to Earnings (P/E)57.6
Beta (1Y)1.21
Revenue Growth50.42%
EPS Growth74.83%
CountryUS
Employees20,209
SectorConsumer Cyclical
Sector Strength53
IndustryHotels, Lodging & Leisure
Share Statistics
EPS (TTM)0.10
Shares Outstanding440,422,120
10 Day Avg. Volume3,667,726
30 Day Avg. Volume4,135,197
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.68
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$7.25Price Target Upside28.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Melco Resorts & Entertainment Business Overview & Revenue Model
Company DescriptionMelco Resorts & Entertainment (MLCO) is a developer, owner, and operator of casino gaming and entertainment resort facilities primarily in Asia. The company operates a portfolio of integrated resorts, including City of Dreams, Studio City, and Altira Macau in Macau, as well as City of Dreams Manila in the Philippines. Melco's resorts offer a wide range of amenities such as luxury hotels, premium dining, retail, entertainment, and gaming facilities.
How the Company Makes MoneyMelco Resorts & Entertainment generates revenue primarily through its gaming operations, which include a wide variety of gaming options such as table games, electronic gaming machines, and VIP gaming rooms. The company's revenue streams are bolstered by non-gaming activities, including hotel accommodations, food and beverage sales, retail, and entertainment venues. Significant partnerships and collaborations with global luxury brands and entertainment companies enhance the appeal of Melco's resorts, attracting both high-end and mass-market customers. The company's strategic location in Macau, a leading global gaming hub, significantly contributes to its earnings, as it draws a large number of tourists, primarily from mainland China and other parts of Asia.
Melco Resorts & Entertainment Financial Statement Overview
Summary
Melco Resorts & Entertainment shows signs of revenue and cash flow recovery in 2023. However, negative stockholders' equity and high leverage present significant financial risks. Improvements in cash flow are positive, but the company's financial position remains fragile.Income Statement
The company's revenue showed significant growth from 2022 to 2023, indicating a recovery from previous periods. Total revenue increased from $1.35 billion in 2022 to $3.78 billion in 2023, reflecting a revenue growth rate of approximately 179.7%. However, despite the revenue growth, the company still reported a net loss of $326.9 million in 2023, resulting in a negative net profit margin. The gross profit margin for 2023 was 31.4%, which indicates decent cost control, but the negative EBIT and EBITDA margins in earlier years highlight ongoing operational challenges.45
Neutral
Balance Sheet
The balance sheet shows a negative stockholders' equity of $1.29 billion in 2023, indicating more liabilities than assets, which is a significant concern. The debt-to-equity ratio is not calculable due to negative equity, suggesting high leverage. Furthermore, return on equity cannot be calculated due to negative net income and equity. The equity ratio is also negative, reinforcing the high risk associated with the company's financial structure.30
Negative
Cash Flow
The company demonstrated a turnaround in operating cash flow, reporting $622.7 million in 2023, compared to negative figures in previous years. This improvement in operating cash flow is a positive sign. The free cash flow also turned positive in 2023 at $358.8 million, indicating better cash management. However, the high level of financing cash outflows suggests continued reliance on external funding, which poses a risk if cash flows do not continue to improve.50
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.70B | 3.78B | 1.35B | 2.01B | 1.73B | 5.74B | Gross Profit |
| 441.03M | 1.18B | 286.52M | 520.58M | 189.52M | 2.10B | EBIT |
| -631.67M | 64.96M | -743.11M | -578.78M | -940.56M | 747.68M | EBITDA |
| -59.13M | 615.58M | -209.54M | -34.99M | -513.09M | 1.34B | Net Income Common Stockholders |
| -871.11M | -326.92M | -1.10B | -956.46M | -1.45B | 373.17M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.31B | 1.31B | 1.81B | 1.65B | 1.76B | 1.44B | Total Assets |
| 8.34B | 8.34B | 9.30B | 8.88B | 9.02B | 9.49B | Total Debt |
| 7.77B | 7.77B | 8.71B | 7.04B | 6.10B | 4.82B | Net Debt |
| 6.46B | 6.46B | 6.90B | 5.38B | 4.34B | 3.42B | Total Liabilities |
| 9.18B | 9.18B | 9.62B | 8.06B | 7.18B | 6.35B | Stockholders Equity |
| -1.29B | -1.29B | -850.33M | 244.75M | 1.10B | 2.44B |
| Cash Flow | Free Cash Flow | ||||
| 111.60M | 358.80M | -1.24B | -948.17M | -1.32B | 386.25M | Operating Cash Flow |
| 65.67M | 622.69M | -619.43M | -268.77M | -860.96M | 836.16M | Investing Cash Flow |
| -628.66M | -48.51M | -806.11M | -674.55M | -53.31M | -1.03B | Financing Cash Flow |
| -256.58M | -1.13B | 1.78B | 821.75M | 1.26B | 97.11M |
Melco Resorts & Entertainment Technical Analysis
Negative
5.64
Price Trends
5.70
Negative
6.17
Negative
6.42
Negative
Market Momentum
-0.01
Positive
47.25
Neutral
61.79
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MLCO, the sentiment is Negative. The current price of 5.64 is below the 20-day moving average (MA) of 5.75, below the 50-day MA of 5.70, and below the 200-day MA of 6.42, indicating a bearish trend. The MACD of -0.01 indicates Positive momentum. The RSI at 47.25 is Neutral, neither overbought nor oversold. The STOCH value of 61.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MLCO.
Melco Resorts & Entertainment Risk Analysis
Melco Resorts & Entertainment disclosed 91 risk factors in its most recent earnings report. Melco Resorts & Entertainment reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Melco Resorts & Entertainment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.60B | 22.62 | 18.25% | 1.38% | 4.13% | 17.73% | |
73 Outperform | $32.26B | 22.97 | 41.30% | 1.89% | 8.93% | 22.50% | |
71 Outperform | $9.44B | 20.38 | -51.73% | 1.13% | 9.13% | -30.00% | |
65 Neutral | $9.15B | 13.40 | 21.76% | ― | 6.66% | -24.59% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
49 Neutral | $6.04B | ― | -6.38% | ― | -2.45% | -135.17% | |
43 Neutral | $2.41B | 57.61 | 25.40% | ― | 50.42% | 74.83% |
* Consumer Cyclical Sector Average
Performance Comparison
MLCO
Melco Resorts & Entertainment
5.64
-1.66
-22.74%
LVS
Las Vegas Sands
45.06
-6.54
-12.67%
MGM
MGM Resorts
32.03
-10.61
-24.88%
MCRI
Monarch Casino & Resort
86.76
16.92
24.23%
WYNN
Wynn Resorts
88.72
-13.35
-13.08%
CZR
Caesars Entertainment
28.48
-14.15
-33.19%
Melco Resorts & Entertainment Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -1.57% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with significant achievements in market share growth, a strong liquidity position, and a solid start to 2025. Despite challenges such as increased operating expenses and upcoming debt maturities, the company's strategic initiatives and asset-light strategy position it well for future growth.Highlights
Increased Market Share in Macau
Melco Resorts' market share in Macau grew month-to-month, ending the year with approximately 15.6% in December. Property visitation exceeded pre-pandemic levels for the first time since the reopening of the borders.
Strong Financial Position and Liquidity
The company added $250 million in liquidity with a revolving credit facility for Studio City, taking available liquidity to $3.3 billion, with consolidated cash on hand of approximately $1.3 billion.
Asset-Light Strategy and Strategic Alternatives
Melco is exploring strategic alternatives for City of Dreams, Manila, as part of an asset-light strategy to enhance financial flexibility and support long-term growth.
Positive Start to 2025
The year began strongly with total GGR excluding junkets outpacing both 2024 and 2019. Property visitation was up 17% compared to last year, and a single day during Chinese New Year placed within the top 10 all-time highs.
Lowlights
Increased Operating Expenses
Operating expenses in Macau increased to $3.2 million per day during Q4 2024, partly due to new activations and additional programming.
Debt Maturities in 2025
Approximately $1.2 billion of debt is due in 2025, although the company states these maturities are covered.
Company Guidance
During the Fourth Quarter 2024 Earnings Conference Call for Melco Resorts and Entertainment Limited, several key metrics and strategic guidance were discussed. The company reported a group-wide adjusted property EBITDA of approximately $295 million, with an adjustment for VIP hold bringing it to $312 million, which is a 5% increase from the previous quarter. The market share in Macau grew to 15.6% in December, and property visitation exceeded pre-pandemic levels, with a notable 17% increase in Chinese New Year visitation compared to the previous year. The operating expenses in Macau increased to $3.2 million per day in Q4 2024 but are expected to decrease to $3.0 million by the end of Q2 2025. The company has a strong liquidity position with $3.3 billion available and aims to reduce its $1.2 billion debt due in 2025. Additionally, they are exploring strategic alternatives for City of Dreams Manila, aligning with their asset-light strategy. Future CapEx is projected at $415 million for 2025, with significant investments in Macau and Sri Lanka.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.