What Does Melco Resorts & Entertainment Limited's (NASDAQ:MLCO) Share Price Indicate?
Melco Resorts & Entertainment Limited (NASDAQ:MLCO), which is in the hospitality business, and is based in Hong Kong, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$25.13 at one point, and dropping to the lows of US$20.09. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Melco Resorts & Entertainment's current trading price of US$21.40 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Melco Resorts & Entertainment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Melco Resorts & Entertainment
Is Melco Resorts & Entertainment still cheap?
Great news for investors – Melco Resorts & Entertainment is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $33.39, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Melco Resorts & Entertainment’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Melco Resorts & Entertainment generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Melco Resorts & Entertainment’s earnings over the next few years are expected to increase by 79%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since MLCO is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on MLCO for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MLCO. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Melco Resorts & Entertainment. You can find everything you need to know about Melco Resorts & Entertainment in the latest infographic research report. If you are no longer interested in Melco Resorts & Entertainment, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
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