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TheStreet Open House

Why Melco Crown Entertainment (MPEL) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Melco Crown Entertainment Ltd. (MPEL) are down 4.5% to $35.50 after an early check on casino revenue growth by Wells Fargo suggests revenue growth for Macau Gaming for April is in the low to mid-teens.

As a result, stocks with exposure to Macau Gaming like Melco Crown Entertainment, Las Vegas Stands Corp. (LVS), MGM Resorts (MGM) and Wynn Resorts (WYNN) have all been trading lower on Monday.

"Based on checks through April 6, we estimate April Macau Gaming revenue growth is trending in the low to mid-teens. Our checks suggest ADR for the first six days of April is tracking in the 900-950MM MOP range, down 17-21%from March's ADR of 1,144MM MOP," said Wells Fargo analyst Cameron McKnight.

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

"We rate MELCO CROWN ENTMT LTD (MPEL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. 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 greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 26.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MPEL has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 68.02% 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 $1.15 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $1.15).
  • 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 106.7% when compared to the same quarter one year prior, rising from $107.98 million to $223.25 million.
  • You can view the full analysis from the report here: MPEL Ratings Report

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