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Melco Resorts & Entertainment Limited (NASDAQ:MLCO): Immense Growth Potential?

Simply Wall St

Looking at Melco Resorts & Entertainment Limited's (NASDAQ:MLCO) earnings update in June 2019, the consensus outlook from analysts appear fairly confident, as a 46% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -12%. Presently, with latest-twelve-month earnings at US$352m, we should see this growing to US$513m by 2020. Below is a brief commentary on the longer term outlook the market has for Melco Resorts & Entertainment. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Melco Resorts & Entertainment

How is Melco Resorts & Entertainment going to perform in the near future?

The longer term expectations from the 17 analysts of MLCO is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MLCO's earnings growth over these next few years.

NasdaqGS:MLCO Past and Future Earnings, September 9th 2019

By 2022, MLCO's earnings should reach US$754m, from current levels of US$352m, resulting in an annual growth rate of 18%. EPS reaches $1.64 in the final year of forecast compared to the current $0.73 EPS today. With a current profit margin of 6.8%, this movement will result in a margin of 12% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Melco Resorts & Entertainment, there are three key 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 Melco Resorts & Entertainment 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 Melco Resorts & Entertainment is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Melco Resorts & Entertainment? 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.