Melco Resorts & Entertainment LTD (NASDAQ: MLCO)

Sector: Consumer Cyclical Industry: Resorts & Casinos CIK: 0001381640
Market Cap 2.24 Bn
P/B -1.79
P/E 12.09
P/S 0.43
ROIC (Qtr) 13.05
Div Yield % 0.00
Rev 1y % (Qtr) 8.59
Total Debt (Qtr) 7.02 Bn
Debt/Equity (Qtr) -5.64
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About

Melco Resorts & Entertainment Limited, or Melco Resorts, operates in the global integrated resort industry, with its stock symbol being MLCO. The company's main business activities involve the development, ownership, and operation of integrated resort facilities in Asia and Europe. Melco Resorts has a significant presence in Macau, where it operates three major casino-based operations: City of Dreams, Altira Macau, and Studio City. Additionally, the company has non-casino based operations in Macau, known as Mocha Clubs, and a casino-based operation...

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Investment thesis

Bull case

  • Healthy cash reserves of 1.15B provide 21.95x coverage of short-term debt 52.33M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust tangible asset base of 6.76B provides 79.61x coverage of working capital 84.89M, indicating strong operational backing.
  • Tangible assets of 6.76B provide robust 6.11x coverage of other current liabilities 1.11B, indicating strong asset backing.
  • Retained earnings of (3.83B) represent substantial 3.07x of equity (1.25B), indicating strong internal capital generation.
  • Cash reserves of 1.15B provide solid 3.33x coverage of other non-current liabilities 344.39M, indicating strong liquidity.

Bear case

  • High receivables of 127.29M relative to inventory of 36.92M (3.45 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating cash flow of 0 provides minimal 0x coverage of tax expenses of 2.83M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating cash flow of 0 barely covers operating expenses of 678.40M with a 0 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Tax assets of 0 provide limited offset against tax liabilities of 63.80M, which is 0x, indicating potential future cash flow pressure from tax obligations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 657.36M, indicating potential underinvestment in innovation relative to administrative overhead.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Resorts & Casinos
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LVS Las Vegas Sands Corp 39.82 Bn 24.48 3.06 15.78 Bn
2 WYNN Wynn Resorts Ltd 20.12 Bn 2,860.00 4.09 12.20 Bn
3 MGM MGM Resorts International 9.16 Bn 44.51 0.52 31.26 Bn
4 BYD Boyd Gaming Corp 8.33 Bn -92.47 2.92 2.46 Bn
5 MTN Vail Resorts Inc 4.91 Bn 196.79 4.35 3.38 Bn
6 HGV Hilton Grand Vacations Inc. 4.44 Bn 83.82 0.89 7.28 Bn
7 CZR Caesars Entertainment, Inc. 3.93 Bn -7.83 0.34 24.88 Bn
8 RRR Red Rock Resorts, Inc. 3.66 Bn 20.78 2.12 3.41 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.09 1.18
EV to Cash from Ops. EV/CFO 13.18 39.36
EV to Debt EV to Debt 1.18 32.02
EV to EBIT EV/EBIT 12.65 44.55
EV to EBITDA EV/EBITDA 8.05 19.91
EV to Free Cash Flow [EV/FCF] EV/FCF 22.62 -82.04
EV to Market Cap EV to Market Cap 3.69 4.40
EV to Revenue EV/Rev 1.60 4.33
Price to Book Value [P/B] P/B -1.79 3.49
Price to Earnings [P/E] P/E 12.09 199.09
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.40
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 38.73
Dividend per Basic Share Div per Share (Qtr) 0.00 1.07
FCF Dividend Payout Ratio % FCF Dividend Payout Ratio % 0.00 21.58
Interest Coverage Int. cover (Qtr) 1.40 -1.90
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 7.02
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -9.79 3.69
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 6.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 74.32 -15.96
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 -13.29
EBIT Growth (1y) % EBIT 1y % (Qtr) 18.28 -1.32
EBT Growth (1y) % EBT 1y % (Qtr) 188.36 -10.90
EPS Growth (1y) % EPS 1y % (Qtr) 355.88 9.03
FCF Growth (1y) % FCF Growth (1y) % 0.00 81.04
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 15.50 4.33
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.68 0.49
Cash Payout Ratio Cash Payout Ratio 0.00 0.11
Cash Ratio Cash Ratio (Qtr) 0.97 0.59
Current Ratio Curr Ratio (Qtr) 1.07 0.90
Debt to Equity Ratio Debt/Equity (Qtr) -5.64 4.57
Interest Cover Ratio Int Coverage (Qtr) 1.40 -1.90
Times Interest Earned Times Interest Earned (Qtr) 1.40 -1.90
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 18.45
EBIT Margin % EBIT Margin % (Qtr) 12.64 11.71
EBT Margin % EBT Margin % (Qtr) 3.64 4.06
Gross Margin % Gross Margin % (Qtr) 37.50 47.91
Net Profit Margin % Net Margin % (Qtr) 3.60 2.46