MELCO RESORTS & ENTERTAINMENT: Consider Caution Amid High Leverage and Weak Coverage Amid Recessionary Fears

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Melco Resorts & Entertainment ($NASDAQ:MLCO) (MLCO) is an international developer, owner, and operator of integrated entertainment, gaming, and hospitality resorts throughout Asia and the world. Despite having a strong portfolio of properties and operations, investors should exercise caution when considering MLCO stock. The company’s high debt load and uncertain economic conditions due to the Coronavirus pandemic could put it at risk. MLCO has borrowed heavily over the years, leaving it highly leveraged and vulnerable to a recession or further economic downturn. In addition, MLCO’s financial strength ratings are below average, and analysts are currently rating MLCO as a “Hold”. While MLCO’s high leverage and weak coverage present a cautionary tale for investors, it is important to remember that MLCO has a strong portfolio of properties and operations. The company’s long-term outlook remains positive, and its Asian resorts have been some of the best performers in the world.

However, given the uncertainty in the market due to the Coronavirus pandemic, investors should consider exercising caution when considering investing in MLCO.

Market Price

MELCO RESORTS & ENTERTAINMENT has recently been facing a number of challenges. On Monday, the stock opened at $12.7 and closed at $12.7, down by 1.0% from last closing price of 12.9. This has caused investors to consider caution amidst high leverage and weak coverage amid recessionary fears. The company has heavy debt obligations which could be difficult to meet in the event of a prolonged recession. Furthermore, despite having a number of strong assets, analysts have been concerned about its ability to generate cash flows to cover these obligations.

It is important for investors to carefully consider the risks associated with investing in MELCO RESORTS & ENTERTAINMENT in this uncertain economic environment. Given the current market conditions, investors should have realistic expectations and invest with caution. Long-term investors should carefully evaluate the company’s financial position and focus on fundamental indicators when making investment decisions. Live Quote…

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for MLCO. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for MLCO. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for MLCO. More…

Key Ratios Snapshot

Some of the financial key ratios for MLCO are shown below. More…

Analysis

At GoodWhale, we have thoroughly analysed the fundamentals of MELCO RESORTS & ENTERTAINMENT to assess its riskiness as an investment. Our risk rating has determined that MELCO RESORTS & ENTERTAINMENT is a low-risk investment in both its business and financial aspects. We have detected one risk warning in the company’s balance sheet, which registered users can access for more detailed analysis. More…

Peers

Each of these companies has its own unique strengths and strategies to stay ahead of the game, creating a dynamic and intense competition between them.

– Las Vegas Sands Corp ($NYSE:LVS)

Las Vegas Sands Corp is an American casino and resort company based in the US state of Nevada. It is the parent company of the Venetian Casino Resort and the Sands Expo and Convention Center, among other properties. The company has a market cap of 36.73B as of 2022, which is a reflection of its market presence and business performance. Additionally, its Return on Equity (ROE) stands at -11.56%, indicating that it is not performing well in terms of generating shareholder value. Las Vegas Sands Corp is a leader in the gaming and hospitality industry, and it continues to be a major player in Las Vegas, Macau, and other international markets.

– Wynn Resorts Ltd ($NASDAQ:WYNN)

Wynn Resorts Ltd is a global hospitality and entertainment company, operating integrated resorts in Las Vegas, Macau, and other parts of the world. As of 2022, the company has a market capitalization of 9.34 billion dollars and a return on equity of 27.93%. This suggests that the company is performing relatively well and is able to generate a healthy return on the capital it has invested. The company has positioned itself as an international leader in the hospitality and entertainment industry, with a focus on providing high-quality experiences for its guests. The strong financial performance of the company indicates that its strategies are working and that it is well-positioned for future growth.

– MGM Resorts International ($NYSE:MGM)

MGM Resorts International is a leading global hospitality and entertainment company, based in Las Vegas, Nevada. The company operates a portfolio of destination resort brands including Bellagio, MGM Grand, Mandalay Bay, The Mirage, Park MGM, and New York-New York. With a market cap of 12.88 billion USD as of 2022, the company’s stock has been performing well in the market with a Return on Equity (ROE) of 20.62%. This indicates a strong financial performance and suggests that the company is utilizing its equity to generate profits and add value to its shareholders.

Summary

Melco Resorts & Entertainment is a casino and gaming company traded on the Nasdaq. Investing analysis of the company reveals that while it has a high level of leverage, its debt coverage ratio is weak. This suggests potential risks in the event of an economic downturn. On the whole, investors should be cautious in investing in this stock and a hold rating is recommended.