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Melco Resorts & Entertainment (MLCO)
NASDAQ:MLCO
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Melco Resorts & Entertainment
(NASDAQ:MLCO)
45Neutral
Positive Factors
Debt reduction 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'.
Valuation and investment potential
Valuation is seen as compelling, with potential upside based on future free cash flow estimates.
Negative Factors
Increase in operating expenses
Investments at City of Dreams to improve competitiveness may take time to yield results, while operating expense increase is likely to be above average.
Operating expenses
Melco surprised with higher operating expenses than expected, which may impact its ability to maintain market share until these expenses are reduced.
Potential risks from non-gaming expenditures
Risks include inconsistent market share trends and potential pressure on free cash flow and dividend resumptions due to non-gaming capital expenditures.
Melco Resorts & Entertainment (MLCO) vs. S&P 500 (SPY)
Market Cap
$2.01B
Dividend YieldN/A
Average Volume (3M)4.02M
Price to Earnings (P/E)49.0
Beta (1Y)1.05
Revenue Growth22.86%
EPS GrowthN/A
CountryUS
Employees21,784
SectorConsumer Cyclical
Sector Strength60
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.10
Shares Outstanding425,513,460
10 Day Avg. Volume4,375,994
30 Day Avg. Volume4,015,677
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.65
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
$7.42Price Target Upside60.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Melco Resorts & Entertainment Business Overview & Revenue Model
Company DescriptionMelco Resorts & Entertainment (MLCO) is a leading developer, owner, and operator of casino gaming and entertainment resort facilities in Asia and Europe. The company is renowned for its integrated resorts, which combine luxury accommodations, world-class dining, premium retail, and entertainment experiences. Melco operates properties in Macau, the Philippines, and Cyprus, providing a diverse range of gaming and non-gaming amenities that cater to both high-end and mass-market customers.
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
Negative
4.63
Price Trends
5.60
Negative
5.83
Negative
6.14
Negative
Market Momentum
-0.11
Positive
37.83
Neutral
12.37
Positive
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 4.63 is below the 20-day moving average (MA) of 5.41, below the 50-day MA of 5.60, and below the 200-day MA of 6.14, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 37.83 is Neutral, neither overbought nor oversold. The STOCH value of 12.37 is Positive, 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.35B | 19.03 | 18.25% | 1.64% | 4.13% | 17.73% | |
73 Outperform | $23.58B | 17.01 | 41.30% | 2.55% | 8.93% | 22.50% | |
67 Neutral | $7.44B | 16.10 | -51.73% | 1.43% | 9.13% | -30.00% | |
66 Neutral | $7.60B | 11.23 | 21.76% | ― | 6.66% | -24.59% | |
59 Neutral | $11.18B | 10.04 | -1.58% | 3.96% | 1.31% | -16.97% | |
46 Neutral | $4.91B | ― | -6.38% | ― | -2.45% | -135.17% | |
45 Neutral | $2.01B | 49.03 | 25.40% | ― | 22.86% | ― |
* Consumer Cyclical Sector Average
Performance Comparison
MLCO
Melco Resorts & Entertainment
4.63
-2.46
-34.70%
LVS
Las Vegas Sands
32.10
-19.34
-37.60%
MGM
MGM Resorts
26.30
-20.00
-43.20%
MCRI
Monarch Casino & Resort
72.87
1.76
2.48%
WYNN
Wynn Resorts
67.93
-36.87
-35.18%
CZR
Caesars Entertainment
23.75
-19.33
-44.87%
Melco Resorts & Entertainment Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -19.20% | 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.