Melco Crown Fails to Impress in Fast-Growing Macau

Melco Crown Entertainment (NASDAQ: MPEL  ) has been one of the hottest stocks in gaming over the past three years, but that run could come to an end as operational leverage slows and new resorts have to live up to expectations. First-quarter numbers at Melco Crown showed continued growth in Macau, but VIP didn't grow significantly and mass-market play was only up 25%. 

That may look impressive, but it compares to 81% growth in the mass market for Las Vegas Sands' (NYSE: LVS  ) Venetian Macau and 74% growth at Sands Cotai Central. 

There are also questions facing expansions like Studio City, which still isn't guaranteed table games, a factor that could make the resort unprofitable. Fool contributor Travis Hoium sat down to go over the good and bad for Melco Crown in the video below. 

Will this stock be your next multibagger?
Gaming stocks are high-growth, and high-growth stocks are where we like to look for multibagger opportunities. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 14, 2014, at 6:04 PM, berg80 wrote:

    Gee, that's a lot of concerns you have there, Travis. First lets look at MPEL's valuation. Consensus EBITDA growth for MPEL in 2014/15/16 is 30%/27%/43% while the stock sports the lowest forward EV/EBITDA multiples by a wide margin compared to its peers. With respect to table allocation at MSC Macau, the Macau authorities have not awarded tables to any concessionaire as yet, so why focus your concern on MPEL? Rest assured they'll get a minimum of 400 tables. Furthermore, MSC is widely considered to be the best located ICR on the strip given its proximity to infrastructure improvements, and will be the first casino to open in 2015. Looking backwards, MPEL produced a 31% YoY EBITDA gain in Q1 with COD growing mass at 44% despite construction in the mass gaming area. Perhaps you didn't realize their lower VIP numbers are attributable to a significant reduction in VIP tables that were shifted to higher margin mass tables. Helping to make MPEL the recognized leader in premium mass gaming with the highest table yield in the biz. Oh, and did I mention those consensus numbers, for the most part, include zero contribution from COD Manila opening this fall?

    Feel better now?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2957591, ~/Articles/ArticleHandler.aspx, 9/18/2014 6:02:22 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement