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How Do Analysts See Melco Resorts & Entertainment Limited (NASDAQ:MLCO) Performing In The Years Ahead?

Simply Wall St

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In December 2018, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) announced its most recent earnings update, which revealed that the business benefited from a slight tailwind, eventuating to a single-digit earnings growth of 1.3%. Today I want to provide a brief commentary on how market analysts predict Melco Resorts & Entertainment's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Melco Resorts & Entertainment

Analysts' outlook for this coming year seems buoyant, with earnings climbing by a robust 26%. This growth seems to continue into the following year with rates arriving at double digit 63% compared to today’s earnings, and finally hitting US$805m by 2022.

NasdaqGS:MLCO Past and Future Earnings, April 1st 2019

Although it’s useful to understand the rate of growth year by year relative to today’s value, it may be more valuable estimating the rate at which the earnings are moving on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Melco Resorts & Entertainment's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 20%. This means that, we can anticipate Melco Resorts & Entertainment will grow its earnings by 20% every year for the next few years.

Next Steps:

For Melco Resorts & Entertainment, there are three important aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is MLCO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MLCO is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MLCO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.