Melco Resorts & Entertainment (NasdaqGS:MLCO) Valuation Focused After Major Macau Casino Closures and Restructuring

If you have been watching Melco Resorts & Entertainment (NasdaqGS:MLCO), this week brought a move that could shape its future in Macau. The company is shutting down multiple gaming venues, including Grand Dragon Casino, Mocha Kuong Fat, Chariot Gaming, and Mocha Grand Fa. Management says this is part of a larger strategic review, aimed at consolidating operations, reallocating gaming assets, and protecting jobs as Macau’s regulations continue to evolve. For investors, the scale and timing of this operational shakeup place a spotlight on Melco's approach to resilience and adaptability in one of the world’s most closely watched casino hubs.

Even with these closures, momentum for Melco’s stock has been anything but dull. It’s up over 60% in the past year and nearly 74% since January. Recent months brought a burst of performance as restructuring news and new projects, like the soon-to-open private hospital at Studio City, landed amid upbeat annual revenue and net income growth. In the big picture, Melco’s willingness to adapt while balancing regulation with market opportunity has fueled optimism about renewed growth and operational efficiency. Still, don’t overlook the deeper story: the stock’s longer-term five-year return is in the red, revealing volatility that keeps value-focused investors on their toes.

After a year of solid gains and headline-worthy moves, is Melco Resorts & Entertainment transitioning into real value territory now, or has the market already factored in the next wave of growth?

Price-to-Earnings of 66x: Is it justified?

Melco Resorts & Entertainment currently trades at a Price-to-Earnings (P/E) ratio of 66x, which is considerably higher than both its peer average and the broader US Hospitality industry average.

The Price-to-Earnings ratio represents how much investors are willing to pay for a company’s earnings. In the context of the hospitality sector, it is a key metric for comparing valuations across companies as it indicates how the market values profit potential relative to earnings.

Such a high P/E suggests investors expect future growth in earnings. However, compared to similar peers with lower multiples, this could indicate the market is pricing in substantial profit acceleration. Is this optimism warranted, or are investors getting ahead of actual performance?

Result: Fair Value of $9.59 (OVERVALUED)

See our latest analysis for Melco Resorts & Entertainment.

However, increased regulatory uncertainty in Macau and continued long-term shareholder losses remain potential risks that could impact Melco’s current growth trajectory.

Find out about the key risks to this Melco Resorts & Entertainment narrative.

Another View: SWS DCF Model Suggests Undervaluation

While the market puts a steep price on Melco’s earnings, our DCF model presents a different perspective and indicates the stock is trading below its fair value. Which view will prove to be closer to reality?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Melco Resorts & Entertainment to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Melco Resorts & Entertainment Narrative

If you see things differently, or want to dig into the figures yourself, it's quick and easy to build your own view of the story in just a few minutes. Do it your way

A great starting point for your Melco Resorts & Entertainment research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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