What Should Investors Know About Melco Resorts & Entertainment Limited’s (NASDAQ:MLCO) Growth?

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After Melco Resorts & Entertainment Limited’s (NASDAQ:MLCO) earnings announcement in March 2019, analysts seem highly optimistic, with earnings expected to grow by a high double-digit of 54% in the upcoming year, relative to the past 5-year average growth rate of -19%. Currently with trailing-twelve-month earnings of US$352m, we can expect this to reach US$540m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Melco Resorts & Entertainment

Exciting times ahead?

The longer term expectations from the 19 analysts of MLCO is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MLCO’s earnings growth over these next few years.

NasdaqGS:MLCO Past and Future Earnings, June 10th 2019
NasdaqGS:MLCO Past and Future Earnings, June 10th 2019

By 2022, MLCO’s earnings should reach US$860m, from current levels of US$352m, resulting in an annual growth rate of 22%. This leads to an EPS of $1.66 in the final year of projections relative to the current EPS of $0.73. In 2022, MLCO’s profit margin will have expanded from 6.8% to 14%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Melco Resorts & Entertainment, I’ve compiled three relevant aspects you should look at:

  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 Melco Resorts & Entertainment 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 Melco Resorts & Entertainment is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Melco Resorts & Entertainment? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.