Studio City International Holdings Ltd (MSC): A Deep Dive into Its Performance Metrics
Long-established in the Travel & Leisure industry, Studio City International Holdings Ltd (NYSE:MSC) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.96%, juxtaposed with a three-month change of -26.95%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Studio City International Holdings Ltd.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 3/10
Growth rank: 1/10
GF Value rank: 10/10
Momentum rank: 1/10
Based on the above method, GuruFocus assigned Studio City International Holdings Ltd the GF Score of 51 out of 100, which signals poor future outperformance potential.
Studio City International Holdings Ltd: A Snapshot
Studio City International Holdings Ltd is a world-class gaming, retail, and entertainment resort located in Cotai, Macau. It operates Studio City Casino with around 250 mass-market gaming tables; approximately 970 gaming machines; and 45 VIP rolling chip tables. In addition, it offers non-gaming attractions, including the world's first figure-8 Ferris wheel, a Warner Bros-themed family entertainment center, a 4-D Batman flight simulator, an exclusive night club, and a live performance arena. Geographically, the company derives the majority of its revenue from the Macau region.
Financial Strength Breakdown
Studio City International Holdings Ltd's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0, positions it worse than 0% of 569 companies in the Travel & Leisure industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just -0.51, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.16 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 3.19, which is worse than 88.99% of 672 companies in the Travel & Leisure industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Profitability Breakdown
Studio City International Holdings Ltd's low Profitability rank can also raise warning signals. Studio City International Holdings Ltd's Operating Margin has declined over the past five years ((-10,046.36%)), as shown by the following data: 2018: 24.14; 2019: 28.40; 2020: -568.87; 2021: -179.26; 2022: -2,400.55. Additionally, Studio City International Holdings Ltd's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 77.54; 2019: 76.82; 2020: -61.75; 2021: 23.04; 2022: -582.02. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Studio City International Holdings Ltd seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -82.1 per year over the past three years, which underperforms worse than 99.74% of 769 companies in the Travel & Leisure industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. It's crucial for investors to consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article first appeared on GuruFocus.
