NEW YORK (TheStreet) -- Shares of Melco Crown Entertainment (MPEL) are lower by 7.09% to $21.35 in early afternoon trading on Wednesday, as revenue in China's Macau gaming hub is off to a slow start in August.
For the first nine days of the month average daily table revenues at casinos in Macau came in a HK$521 million, a 6% decline when compared to the same period in July, Barron's reported.
Revenue out of the gaming hub has been falling consecutively each month for over a year, as the government's anti-corruption crackdown is keeping VIP and high stakes players away from the tables.
Melco Crown is a Hong Kong-based casino operator.
Additionally, U.S traded China-based stocks have been taking a hit for a second straight day after China devalued the yuan by almost 2% on Tuesday.
Separately, TheStreet Ratings team rates MELCO CROWN ENTMT LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MELCO CROWN ENTMT LTD (MPEL) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MPEL's debt-to-equity ratio of 0.99 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 2.64 is very high and demonstrates very strong liquidity.
- MPEL, with its decline in revenue, underperformed when compared the industry average of 4.4%. Since the same quarter one year prior, revenues fell by 23.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, MELCO CROWN ENTMT LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- MELCO CROWN ENTMT LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MELCO CROWN ENTMT LTD reported lower earnings of $1.10 versus $1.15 in the prior year. For the next year, the market is expecting a contraction of 54.2% in earnings ($0.50 versus $1.10).
- 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 83.1% when compared to the same quarter one year ago, falling from $143.64 million to $24.25 million.
- You can view the full analysis from the report here: MPEL Ratings Report