Melco Resorts & Entertainment Limited (NASDAQ:MLCO): Will The Growth Last?
The latest earnings release Melco Resorts & Entertainment Limited’s (NASDAQ:MLCO) announced in September 2017 showed that the business benefited from a large tailwind, eventuating to a high double-digit earnings growth of 66.35%. Below, I’ve presented key growth figures on how market analysts view Melco Resorts & Entertainment’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Melco Resorts & Entertainment
Analysts’ outlook for the coming year seems buoyant, with earnings growing by a significant 53.63%. This high growth in earnings is expected to continue, bringing the bottom line up to $680.6M by 2020.
Although it is helpful to be aware of the growth rate year by year relative to today’s level, it may be more insightful to estimate the rate at which the company is rising or falling every year, on average. The pro of this technique is that we can get a bigger picture of the direction of Melco Resorts & Entertainment’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 18.98%. This means, we can expect Melco Resorts & Entertainment will grow its earnings by 18.98% every year for the next few years.
Next Steps:
For Melco Resorts & Entertainment, there are three important factors you should further research:
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!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
