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TheStreet Open House

Melco Crown Entertainment (MPEL) Falls Despite Positive Earnings

NEW YORK (TheStreet) -- Melco Crown Entertainment (MPEL) fell 0.3% to $42.24 Thursday despite quarterly results that beat analyst expectations.

For the fourth quarter Melco Crown Entertainment posted earnings of 40 cents a share, beating analyst estimates of 38 cents a share by 2 cents. Revenue increased 26.6% year-over-year to $1.4 billion, compared to analyst estimates of $1.36 billion.

The company credited increase in net revenue largely to group-wide revenue increases in gaming segments.

The casino company said its "development pipeline continues to progress as planned."

Must read: 3 Stocks Underperforming Today In The Leisure Industry

TheStreet Ratings team rates MELCO CROWN ENTMT LTD as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MELCO CROWN ENTMT LTD (MPEL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 23.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 68.42% and other important driving factors, this stock has surged by 108.65% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MPEL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • MELCO CROWN ENTMT LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. 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 ($1.29 versus $0.76).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 71.1% when compared to the same quarter one year prior, rising from $104.87 million to $179.40 million.
  • MPEL's debt-to-equity ratio of 0.72 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.57 is very high and demonstrates very strong liquidity.

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