Does Melco Resorts & Entertainment Deserve a Place in Your Portfolio?

NASDAQ: MLCO | Melco Resorts & Entertainment Limited News, Ratings, and Charts

MLCO – Integrated resort facilities operator Melco Resorts & Entertainment has been making operational and business progress, but it could still suffer from any renewed travel restrictions. So, let’s find out if it is wise to add the stock to one’s portfolio now.

Melco Resorts & Entertainment Limited (MLCO) in Central, Hong Kong, posted disappointing fourth-quarter results, and management noted that COVID-19 continues to negatively affect the company’s operations, financial position, and prospects negatively.

The stock has declined 27.8% in price over the past month to close yesterday’s trading session at $7.54. In addition, it is currently trading 66% below its 52-week high of $22.19, which it hit on March 15, 2021. So, MLCO’s near-term prospects look bleak.

Here is what could influence MLCO’s performance in the upcoming months:

Disappointing Financials

For its fiscal fourth quarter, ended Dec.31, 2021, MLCO’s net revenue declined 9% year-over-year to $480.60 million. The company’s total liabilities increased 12.3% year-over-year to $8.06 billion. In comparison, its adjusted net loss came in at $152.36 million, compared to $188.48 million in the prior-year period. And its  adjusted loss per share came in at $0.32, compared to $0.40 in the year-ago period.

Weak Analyst Estimates

For its fiscal quarter ending June 30, 2022, analysts expect MLCO’s EPS and revenue to decline 0.3% and 4.7%, respectively, year-over-year. In addition, its EPS is expected to remain negative in the current quarter, next quarter, and the current year.

Stretched Valuation

In terms of forward EV/S, MLCO’s 5.18x is 308.5% higher than the 1.27x industry average. And its 16.53x forward EV/EBITDA is 81.5% higher than the 9.11x industry average. Furthermore, the stock’s 1.24x forward P/S  is 34.3% higher than the 0.92x  industry average.

Low Profitability

In terms of trailing-12-month EBITDA margin, MLCO’s 2.04% is 83.7% lower than the 12.53% industry average. And its 0.22% trailing-12-month asset turnover ratio is 78.6% lower than the 1.05% industry average. Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA are negative compared to the 17.25%, 7.91%, and 6.09%, respective industry averages.

POWR Ratings Reflect Bleak Prospects

MLCO has an overall D rating, which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering  118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MLCO has a D grade for Quality, which is in sync with its lower-than-industry profitability ratios.

The stock has a D grade for Stability, which is consistent with its 1.76 beta. In addition, MLCO has a C grade for Value, which is  in sync with its higher-than-industry valuation ratios.

MLCO also has a C grade for Growth. This is justified because analysts expect its EPS to decline in the near term.

Furthermore, the stock has a C grade for Momentum, which is consistent with its 48.2% loss over the past six months and 65.6% decline over the past year.

MLCO is ranked #23 of 33 stocks in the Entertainment – Casinos/Gambling industry. Click here to access MLCO’s rating for Sentiment.

Bottom Line

MLCO is currently trading below its 50-day and 200-day moving averages of $10.34 and $12.28, respectively, indicating a downtrend. And it could keep losing due to concerns over travel restrictions in the near term. Because the stock looks overvalued at the current price level, we think it best to avoid it now.

How Does Melco Resorts & Entertainment (MLCO) Stack Up Against its Peers?

While MLCO has an overall POWR Rating of D, one might want to consider investing in the following Entertainment – Casinos/Gambling stocks with an A (Strong Buy) or B (Buy) rating: Monarch Casino & Resort, Inc. (MCRI), Century Casinos, Inc. (CNTY), and Accel Entertainment, Inc. (ACEL).


MLCO shares were trading at $8.00 per share on Tuesday afternoon, up $0.46 (+6.10%). Year-to-date, MLCO has declined -21.41%, versus a -10.87% rise in the benchmark S&P 500 index during the same period.


About the Author: Nimesh Jaiswal


Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MLCOGet RatingGet RatingGet Rating
MCRIGet RatingGet RatingGet Rating
CNTYGet RatingGet RatingGet Rating
ACELGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Recession or Not Recession…That Is the Question

Every investor appreciates that recessions and bear markets go hand in hand. But the definition of a recession often seems more difficult to pin down. So are we in a recession? And if not, then does that mean that disaster has been averted or that the pain train is still rolling towards investors? This is an important debate because it helps us appreciate what lies ahead for the stock market (SPY). We will tackle this vital topic in this week's commentary. Read on below...

:  |  News, Ratings, and Charts

3 Active Stocks on Wall Street to Buy Right Now

Even though the U.S. stocks ended July with decent gains, growing recession fears could keep the stock market under pressure in the near term. However, despite the current market headwinds, it could be wise to invest in fundamentally sound stocks, Microsoft (MSFT), SIGA Technologies (SIGA), and Fortinet (FTNT), which have been active on Wall Street lately. Read on to learn more…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

:  |  News, Ratings, and Charts

2 Winning Stocks to Pay Attention to This Week

Concerns over soaring inflation, the Fed’s aggressive interest rate hikes, the decline in GDP for two consecutive quarters, and a potential recession are expected to keep the stock market under pressure in the near term. Fundamentally sound and winning stocks Murphy USA (MUSA) and JAKKS Pacific (JAKK) could be good additions to your watchlist as investors prepare for a busy week of inflation data. Let’s discuss…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

Read More Stories

More Melco Resorts & Entertainment Limited (MLCO) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All MLCO News