Melco Resorts & Entertainment (NASDAQ:MLCO) Releases Quarterly Earnings Results, Meets Estimates

Key Points

• Melco met quarterly earnings expectations, reporting $0.06 EPS versus the $0.06 consensus, although revenue declined 5.7% year over year and profitability metrics remained weak.
• Macau operations faced near-term pressure from lower visitation, World Cup-related gaming substitution and an unfavorable VIP win rate, but management said trends improved after the event.
• Management highlighted future growth and financial flexibility through the REM resort opening after October’s Golden Week, improving performance outside Macau, $2.8 billion in liquidity and plans to resume a substantive dividend in 2027.

Melco Resorts & Entertainment (NASDAQ:MLCO - Get Free Report) issued its earnings results on Thursday. The company reported $0.06 earnings per share for the quarter, hitting the consensus estimate of $0.06, Briefing.com reports. Melco Resorts & Entertainment had a negative return on equity of 32.60% and a net margin of 4.33%.During the same period last year, the company posted $0.04 EPS. The firm's quarterly revenue was down 5.7% on a year-over-year basis.

Here are the key takeaways from Melco Resorts & Entertainment's conference call:

• Macau faced near-term pressure in Q2 from lower-than-expected visitation, World Cup-related substitution of gaming spend, and an unfavorable City of Dreams Macau VIP win rate of 2.7% versus 3.9% a year earlier. Group adjusted property EBITDA was approximately $304 million, or $312 million excluding VIP hold effects.
• Management said post-World Cup trends improved in late July and early August, with customers returning and playing volumes normalizing. Macau daily operating expenses remained controlled at roughly HKD 3.3–3.4 million, including House of Dancing Water, despite the upcoming REM ramp-up.
• REM has soft-opened and is scheduled for a grand opening after Golden Week in October; management views the differentiated luxury product, new gaming areas, and City of Dreams retail revamp as catalysts for visitation and customer engagement. However, retail construction is expected to disrupt the property through approximately June 2027.
• The company’s non-Macau portfolio continued to grow, with City of Dreams Manila EBITDA up 9% year over year to $31 million, Cyprus EBITDA up 60%, and Sri Lanka generating positive EBITDA of $3.5 million as its casino operations ramp.
• Melco reported approximately $2.8 billion of available liquidity and extended and upsized its revolving credit facility to $2.8 billion through June 2031, supporting financial flexibility. The company repurchased approximately 22.4 million ADSs during the quarter and now expects to recommence a substantive dividend in 2027, while the 2027 debt maturities remain under review.

Melco Resorts & Entertainment Price Performance

Melco Resorts & Entertainment stock traded down $0.01 during trading hours on Thursday, hitting $5.50. The company had a trading volume of 1,486,893 shares, compared to its average volume of 2,262,461. The firm's fifty day moving average is $5.48 and its 200-day moving average is $5.65. Melco Resorts & Entertainment has a fifty-two week low of $5.07 and a fifty-two week high of $10.15. The firm has a market capitalization of $2.14 billion, a P/E ratio of 9.49, a price-to-earnings-growth ratio of 3.47 and a beta of 0.59.

Institutional Trading of Melco Resorts & Entertainment

Large investors have recently added to or reduced their stakes in the business. Kestra Advisory Services LLC bought a new position in shares of Melco Resorts & Entertainment in the fourth quarter worth about $48,000. Quarry LP acquired a new stake in shares of Melco Resorts & Entertainment during the 3rd quarter valued at about $68,000. Northwestern Mutual Wealth Management Co. acquired a new stake in Melco Resorts & Entertainment during the second quarter valued at approximately $71,000. Amundi bought a new stake in Melco Resorts & Entertainment in the fourth quarter valued at $79,000. Finally, WINTON GROUP Ltd bought a new stake in shares of Melco Resorts & Entertainment in the 4th quarter worth about $89,000. 39.62% of the stock is owned by institutional investors.

Analysts Set New Price Targets

A number of brokerages recently issued reports on MLCO. CICC Research upgraded shares of Melco Resorts & Entertainment to an "outperform" rating in a research note on Sunday, April 19th. Susquehanna cut their price objective on shares of Melco Resorts & Entertainment from $12.00 to $8.00 and set a "positive" rating on the stock in a research report on Wednesday. CLSA raised Melco Resorts & Entertainment from a "hold" rating to an "outperform" rating and cut their price target for the company from $6.10 to $6.00 in a report on Friday, July 10th. JPMorgan Chase & Co. decreased their price target on Melco Resorts & Entertainment from $6.00 to $5.70 and set a "neutral" rating for the company in a research note on Thursday, July 16th. Finally, Wall Street Zen cut Melco Resorts & Entertainment from a "buy" rating to a "hold" rating in a report on Sunday, June 28th. One investment analyst has rated the stock with a Strong Buy rating, five have given a Buy rating, two have issued a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat.com, the stock currently has an average rating of "Moderate Buy" and an average price target of $7.43.

About Melco Resorts & Entertainment

Melco Resorts & Entertainment Limited NASDAQ: MLCO is a developer, owner and operator of integrated resort destinations in Asia and Europe. The company's portfolio spans casino gaming, hotel accommodations, retail, dining and entertainment facilities. Melco's properties feature a mix of luxury hotels, award-winning restaurants, high-limit gaming salons and entertainment venues, catering to a broad range of leisure and business travelers.

In Macau, Melco owns and operates flagship properties including City of Dreams Macau, Altira Macau and Studio City.

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