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Melco Crown Entertainment Ltd Stock Buy Recommendation Reiterated (MPEL)

NEW YORK (TheStreet) -- Melco Crown Entertainment (Nasdaq:MPEL) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • MPEL's revenue growth has slightly outpaced the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 11.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • MPEL's debt-to-equity ratio of 0.86 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MPEL's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.83 is high and demonstrates strong liquidity.
  • Compared to its closing price of one year ago, MPEL's share price has jumped by 101.06%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • MELCO CROWN ENTMT LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MELCO CROWN ENTMT LTD increased its bottom line by earning $0.76 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.76).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 56.0% when compared to the same quarter one year ago, falling from $122.09 million to $53.78 million.

Melco Crown Entertainment Limited, through its subsidiaries, develops, owns, and operates casino gaming and entertainment resort facilities in Macau. Melco Crown Entertainment has a market cap of $12.5 billion and is part of the services sector and leisure industry. The company has a P/E ratio of 32.00, above the S&P 500 P/E ratio of 18.00. Shares are up 34.8% year to date as of the close of trading on Friday.

You can view the full Melco Crown Entertainment Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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