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Melco Resorts & Entertainment Limited (NASDAQ:MLCO), might not be a large cap stock, but it saw a significant share price rise of 30% in the past couple of months on the NASDAQGS. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Melco Resorts & Entertainment’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
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. Our valuation model shows that the intrinsic value for the stock is $8.36, but it is currently trading at US$6.56 on the share market, meaning that there is still an opportunity to buy now. 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 does the future of Melco Resorts & Entertainment look like?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In Melco Resorts & Entertainment's case, its revenues over the next few years are expected to grow by 34%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger 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 an optimistic 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 financial health 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 track record of its management team, in order to make a well-informed buy.