Melco Resorts & Entertainment: Returning Consumers May Begin A Recovery

March 10, 2022 World Earnings & Filings Industry Updates

Summary
The Covid-19 pandemic and ensuing lockdown wreaked havoc on the resorts and casinos industry.

With the return of the pre-pandemic world, the industry is experiencing a nice surge that is likely to continue.

Restaurant and casino upturns have caused a complete recovery in cash holdings since the massive downturn seen in 2020.

With revenue finally showing signs of growth, the company may finally be out of the storm.

Melco Resorts & Entertainment (NASDAQ: MLCO) is an owner and operator of integrated resorts and casinos serving Hong Kong, Macau, Japan, Cyprus, and the Philippines. The company was originally known as Melco Crown Entertainment, and the new updated name of Melco Resorts & Entertainment was adopted in May of 2017. The company operates several businesses scattered across Europe and Asia. The most notable of those, Altira Macau, is the company’s flagship resort and casino located in Taipa, Macau – a special administrative region of China. The company is far from being done growing, however, as it is opening a Mediterranean resort and casino in Cyprus and a ski resort in Japan.

The company enjoys a wide array of interests across the globe, including being named an official sponsor of Manchester City F.C. in 2019.

In this article, I will show that despite a rough showing in the pandemic-riddled years of 2020 and 2021, the future offers a great deal of upside. The company has shown a consistent ability to generate profits. Still, with the global gambling industry seeing a surge, I expect the numbers to swing back towards the company’s historical average with a significant gain. For these reasons, I view Melco Resorts & Entertainment as an under-the-radar stock. Despite the obvious risks, I believe there is significant potential upside and investors should be bullish on Melco’s future.

Risk Factors
One of the risk factors associated with investment in what could be considered a “luxury” industry is the state of the global economy. In 2021 the global economy experienced growth at a moderate rate of 5.9%. There once was optimism that the rate would see a robust spike heading into 2022. However, this is not the case as the growth rate is now projected to decline to a low 4.4%. Less money doesn’t just mean less cash flow for businesses, but also for people. People who lack extra money are less likely to frequent “luxury” establishments, which could negatively impact those businesses.