NEW YORK (TheStreet) --Shares of Melco Crown Entertainment (MPEL) finished the day down by 3.97% to $16.92 on strong trading volume on Tuesday afternoon, as casino stocks struggled from the latest revenue results out of China's Macau gambling district.
Macau's August revenue fell by 35.5% when compared to the same month last year, making this the 15th consecutive month of declines, the Financial Times reports.
Casino revenues from Macau fell to 18.6 billion patacas or $2.3 billion in August, as the slowdown in China's economic growth has worsened the decline in gambling that began over a year ago, when the Chinese government initiated an anti-corruption crackdown.
Macau is the only area in China where casinos are legal the Financial Times said, adding that like Hong Kong it is a "special administrative region" with its own currency and set of laws.
In response to the revenue decline the government in Macau announced today that it will tighten its fiscal spending, Reuters reports.
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:
- The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.64, which clearly demonstrates the ability to cover short-term cash needs.
- MPEL, with its decline in revenue, underperformed when compared the industry average of 4.0%. 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 50.9% in earnings ($0.54 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