Back to top

Image: Bigstock

Are Investors Undervaluing Melco Resorts & Entertainment Limited (MLCO) Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Melco Resorts & Entertainment Limited (MLCO - Free Report) . MLCO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 19.66. This compares to its industry's average Forward P/E of 28.37. Over the last 12 months, MLCO's Forward P/E has been as high as 32.84 and as low as -45.06, with a median of 20.03.

We also note that MLCO holds a PEG ratio of 0.64. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MLCO's industry currently sports an average PEG of 1.31. Over the past 52 weeks, MLCO's PEG has been as high as 0.72 and as low as 0.26, with a median of 0.41.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MLCO has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.14.

Finally, we should also recognize that MLCO has a P/CF ratio of 7.97. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. MLCO's P/CF compares to its industry's average P/CF of 27.62. MLCO's P/CF has been as high as 24.25 and as low as 5.22, with a median of 9.47, all within the past year.

These are only a few of the key metrics included in Melco Resorts & Entertainment Limited's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MLCO looks like an impressive value stock at the moment.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Melco Resorts & Entertainment Limited (MLCO) - free report >>

Published in