MLCOMelco Resorts & Entertainment Limited
Is the business good?
The checks split: earnings fully cash-backed (1.4×), but margins compressing.
Operating profit is fully backed by cash. Conversion is worsening vs a year ago.
Operating margin has narrowed over the past few years, profitability per dollar of sales is eroding.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is MLCO?
Melco Resorts & Entertainment Limited earns 11% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 1.6 points above what the capital costs: growth creates value
- Operating margin
- 12%
Operating margin · Resorts & Casinos median 15% · fiscal year to FY2025
- Cash conversion
- 1.39×
Cash conversion · 1.64× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −7.5%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2020 | −54% |
| FY2021 | −29% |
| FY2022 | −55% |
| FY2023 | 1.7% |
| FY2024 | 10% |
| FY2025 | 12% |
Details›
- Operating marginfiscal year to FY2025
- 12%
- Net marginfiscal year to FY2025
- 3.6%
- Free cash flow margin
- 16%
- Revenue, trailing twelve months
- $5.16B
- Free cash flow, trailing twelve months
- $802M
- Net income, trailing twelve months
- $185M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 11%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.