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Melco Resorts & Entertainment (MLCO)
NASDAQ:MLCO
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Melco Resorts & Entertainment
(NASDAQ:MLCO)
Rating:52Neutral
Price Target:―
Positive Factors
Cash Flow Management
There are no urgent liquidity needs at MLCO as it has prearranged refinancing for debt due in 2025 and has substantial cash and credit line availability.
Market Share
The company's price objective has been raised by 16% due to higher market share and lower interest rates.
Show Attraction
The flagship show 'House of Dancing Waters' is expected to attract more non-gaming patrons, potentially increasing its popularity.
Negative Factors
High Leverage
High leverage at 5.5x net debt/EBITDA is a concern for MLCO.
Investor Sentiment
The surprise rights issue announced by Melco International may dampen investor sentiment slightly.
Strategic Concerns
The liquidity needs at Melco International may raise investor questions on whether MLCO would be asked to declare dividends, lend to its parent, or undertake targeted share repurchases to upstream cash to its parent or Chairman.
Melco Resorts & Entertainment (MLCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.64B
Dividend YieldN/A
Average Volume (3M)5.12M
Price to Earnings (P/E)43.8
Beta (1Y)1.00
Revenue Growth14.07%
EPS GrowthN/A
CountryUS
Employees21,784
SectorConsumer Cyclical
Sector Strength74
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.08
Shares Outstanding425,513,460
10 Day Avg. Volume3,508,326
30 Day Avg. Volume5,117,525
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)-0.56
Price to Sales (P/S)0.00
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
$6.88Price Target Upside11.87% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Melco Resorts & Entertainment Business Overview & Revenue Model
Company DescriptionMelco Resorts & Entertainment Limited develops, owns, and operates casino gaming and resort facilities in Asia and Europe. It owns and operates City of Dreams, an integrated casino resort that has approximately 511 gaming tables and 572 gaming machines; approximately 770 rooms, and suites and villas; approximately 25 restaurants and bars, and 165 retail outlets; and health and fitness clubs, three swimming pools, spa and salons, and banquet and meeting facilities. The company also operates Altira Macau, a casino hotel, which has approximately 101 gaming tables and 121 gaming machines; 230 hotel rooms; various dining and casual restaurants, and recreation and leisure facilities; and various non-gaming amenities comprising a spa, gymnasium, outdoor garden podium, and sky terrace lounge. In addition, it operates Studio City, a cinematically themed integrated resort with gaming facilities, hotel, entertainment, retail, and food and beverage outlets that comprises 290 gaming tables and 645 gaming machines in Cotai, Macau. Further, the company owns and operates seven Mocha Clubs with 813 gaming machines, as well as Grand Dragon casino in Taipa Island, Macau. Additionally, it operates and manages City of Dreams Manila, an integrated resort in the Entertainment City complex in Manila; a casino in Limassol and three satellite casinos in Nicosia, Ayia Napa, and Paphos in Cyprus. The company was formerly known as Melco Crown Entertainment Limited and changed its name to Melco Resorts & Entertainment Limited in April 2017. The company was incorporated in 2004 and is headquartered in Central, Hong Kong. Melco Resorts & Entertainment Limited is a subsidiary of Melco Leisure and Entertainment Group Limited.
How the Company Makes MoneyMelco Resorts & Entertainment generates revenue primarily through its casino operations, which include table games, electronic gaming machines, and VIP gaming rooms. The company also earns significant income from its hotel services, dining establishments, and entertainment offerings. Additional revenue streams come from retail operations within its resorts and partnerships with luxury brands. Melco's strategic locations in major tourist destinations and its focus on premium customer experiences contribute to its financial success. Furthermore, its properties often collaborate with local and international businesses to enhance their offerings and attract a broader customer base.
Melco Resorts & Entertainment Financial Statement Overview
Summary
Melco Resorts & Entertainment is showing operational profitability improvements, with better revenue and EBITDA margins. However, substantial financial risks persist, including negative equity, high leverage, and liquidity constraints, severely impacting financial stability.Income Statement
Melco Resorts & Entertainment shows marginal improvement in its financial performance with a significant increase in total revenue from the previous year. The gross profit margin improved to 35.85% in 2024 from 31.36% in 2023. However, the net profit margin remains low at 0.94% in 2024, despite recovering from negative figures in previous years. The EBIT and EBITDA margins show positive trends, reaching 10.45% and 22.16% respectively in 2024, highlighting operational improvements. Overall, the company is on a path to recovery but still faces challenges in achieving sustainable profitability.45
Neutral
Balance Sheet
The balance sheet reveals a concerning scenario with a negative stockholders' equity of -$1.33 billion in 2024, indicating insolvency. This results in a negative equity ratio, which is a critical red flag. Moreover, the debt-to-equity ratio cannot be calculated due to negative equity, but the high total debt of $7.46 billion suggests potential leverage risks. Return on equity cannot be assessed due to negative equity. The company's financial stability is a major concern, overshadowing the improvements in operational metrics.30
Negative
Cash Flow
Cash flow analysis indicates significant issues with operational sustainability. In 2024, operating cash flow, capital expenditure, and free cash flow are reported as zero, making it challenging to assess cash flow efficiency. The absence of positive free cash flow and operating cash flow growth in recent years suggests liquidity constraints and inadequate cash generation to cover operational and capital expenses. This highlights the need for better cash flow management to support ongoing business operations.20
Very Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.64B | 3.78B | 1.35B | 2.01B | 1.73B | Gross Profit |
| 1.66B | 1.18B | 286.52M | 520.58M | 189.52M | EBIT |
| 484.63M | 64.96M | -743.11M | -578.78M | -940.56M | EBITDA |
| 1.03B | 615.58M | -209.54M | -34.99M | -513.09M | Net Income Common Stockholders |
| 43.54M | -326.92M | -1.10B | -956.46M | -1.45B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.15B | 1.31B | 1.81B | 1.65B | 1.76B | Total Assets |
| 7.99B | 8.34B | 9.30B | 8.88B | 9.02B | Total Debt |
| 7.46B | 7.77B | 8.71B | 7.04B | 6.10B | Net Debt |
| 6.31B | 6.46B | 6.90B | 5.38B | 4.34B | Total Liabilities |
| 8.93B | 9.18B | 9.62B | 8.06B | 7.18B | Stockholders Equity |
| -1.33B | -1.29B | -850.33M | 244.75M | 1.10B |
| Cash Flow | Free Cash Flow | |||
| 325.48M | 358.80M | -1.24B | -948.17M | -1.32B | Operating Cash Flow |
| 626.66M | 622.69M | -619.43M | -268.77M | -860.96M | Investing Cash Flow |
| -300.81M | -48.51M | -806.11M | -674.55M | -53.31M | Financing Cash Flow |
| -478.35M | -1.13B | 1.78B | 821.75M | 1.26B |
Melco Resorts & Entertainment Technical Analysis
Positive
6.15
Price Trends
5.42
Positive
5.55
Positive
5.95
Positive
Market Momentum
0.31
Negative
63.82
Neutral
62.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MLCO, the sentiment is Positive. The current price of 6.15 is above the 20-day moving average (MA) of 5.75, above the 50-day MA of 5.42, and above the 200-day MA of 5.95, indicating a bullish trend. The MACD of 0.31 indicates Negative momentum. The RSI at 63.82 is Neutral, neither overbought nor oversold. The STOCH value of 62.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $6.03B | 12.10 | 35.62% | 0.93% | 6.06% | 10.05% | |
72 Outperform | $28.93B | 22.82 | 39.21% | 2.08% | -0.09% | -13.07% | |
68 Neutral | $8.95B | 14.05 | 21.38% | ― | 2.76% | -14.31% | |
62 Neutral | $6.97B | 11.36 | 2.77% | 3.91% | 2.66% | -22.00% | |
59 Neutral | $6.12B | ― | -5.56% | ― | -1.25% | -130.83% | |
57 Neutral | $9.80B | 25.60 | -51.73% | 1.07% | -0.08% | -48.66% | |
52 Neutral | $2.64B | 43.77 | 25.40% | ― | 14.07% | ― |
* Consumer Cyclical Sector Average
Performance Comparison
MLCO
Melco Resorts & Entertainment
6.15
-2.44
-28.41%
BYD
Boyd Gaming
73.01
20.21
38.28%
LVS
Las Vegas Sands
40.31
-4.58
-10.20%
MGM
MGM Resorts
31.37
-8.83
-21.97%
WYNN
Wynn Resorts
91.50
-2.91
-3.08%
CZR
Caesars Entertainment
27.96
-6.76
-19.47%
Melco Resorts & Entertainment Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 9.04%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in Macau with record market share and successful events driving visitation. While there are challenges in the Philippines and high-end retail, disciplined cost management and strategic share buybacks underscore a positive outlook.Q1-2025 Updates
Positive Updates
Record Market Share Growth in Macau
Melco Resorts' market share in Macau increased from 14.7% in 4Q 2024 to 15.7% in 1Q 2025, reaching record highs in mass drop at City of Dreams and Studio City.
Strong Visitation and Event Success
Property visitation grew by 30% year-on-year during May Golden Week. House of Dancing Water was relaunched successfully, expected to drive further visitation.
Improved EBITDA and Cost Management
Studio City property EBITDA increased 20% quarter-to-quarter. Group-wide adjusted property EBITDA for the first quarter was approximately $341 million, with reduced OpEx of $3.1 million per day.
Successful Share Buyback
Repurchased approximately $165 million in MLCO ADSs in 2025, capitalizing on low market valuations.
Negative Updates
Philippines Competitive Environment
The heightened competitive environment in the Philippines impacted performances in 1Q 2025, leading to adjustments in cost structure and marketing programs.
Luxury Retail Challenges
Continued challenges in the high-end luxury retail segment at City of Dreams, impacting non-gaming revenue.
Upcoming Debt Maturities
Two bond maturities in June and July 2025, though both are already covered through credit facilities and cash on hand.
Company Guidance
During the first quarter of 2025, Melco Resorts & Entertainment Limited reported several notable metrics, demonstrating strong performance and growth prospects. The company's market share in Macau increased from 14.7% in Q4 2024 to 15.7% in Q1 2025, while property visitation surged by 30% year-on-year during the May Golden Week. Mass drop at City of Dreams rose by over 20% compared to the previous year, contributing to a 12% year-on-year increase in rated deal win across their Macau properties. Studio City property EBITDA grew by 20% quarter-to-quarter, reflecting the impact of completed renovations. Group-wide adjusted property EBITDA was approximately $341 million, with a targeted daily operating expense reduction to $3.0 million by the end of Q2 2025. The company maintained robust liquidity with $3.3 billion available and repurchased $165 million in shares, emphasizing a balanced capital allocation strategy. Additionally, City of Dreams Mediterranean and Cyprus achieved a 10% year-over-year growth in property EBITDA.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.