Melco Resorts & Entertainment (NASDAQ:MLCO – Get Free Report) and Universal Entertainment (OTCMKTS:UETMF – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.
Insider & Institutional Ownership
39.6% of Melco Resorts & Entertainment shares are held by institutional investors. 57.1% of Melco Resorts & Entertainment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Melco Resorts & Entertainment and Universal Entertainment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Melco Resorts & Entertainment | 3.58% | -29.08% | 3.59% |
| Universal Entertainment | -181.64% | 18.75% | 10.29% |
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Melco Resorts & Entertainment | 1 | 3 | 4 | 1 | 2.56 |
| Universal Entertainment | 0 | 0 | 0 | 0 | 0.00 |
Melco Resorts & Entertainment presently has a consensus target price of $9.06, suggesting a potential upside of 65.93%. Given Melco Resorts & Entertainment’s stronger consensus rating and higher probable upside, equities analysts clearly believe Melco Resorts & Entertainment is more favorable than Universal Entertainment.
Valuation & Earnings
This table compares Melco Resorts & Entertainment and Universal Entertainment”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Melco Resorts & Entertainment | $5.16 billion | 0.41 | $185.04 million | $0.46 | 11.87 |
| Universal Entertainment | $821.59 million | 0.62 | -$1.55 billion | ($19.42) | -0.34 |
Melco Resorts & Entertainment has higher revenue and earnings than Universal Entertainment. Universal Entertainment is trading at a lower price-to-earnings ratio than Melco Resorts & Entertainment, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Melco Resorts & Entertainment has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Universal Entertainment has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.
Summary
Melco Resorts & Entertainment beats Universal Entertainment on 12 of the 15 factors compared between the two stocks.
About Melco Resorts & Entertainment
Melco Resorts & Entertainment Limited, through its subsidiaries, develops, owns, and operates casino gaming and entertainment casino resort facilities in Asia. It owns and operates City of Dreams, an integrated casino resort that has 500 gaming tables and 800 gaming machines; approximately 1,400 hotel rooms and suites; a wet stage performance theater with approximately 2,000 seats; approximately 30 restaurants and bars, and 150 retail outlets; and recreation and leisure facilities, including health and fitness clubs, swimming pools, spa and salons, and banquet and meeting facilities. The company also operates Altira Macau, a casino hotel, which has approximately 112 gaming tables and 56 gaming machines; 230 hotel rooms; various fine dining and casual restaurants, and recreation and leisure facilities; and various non-gaming amenities comprising spa, gymnasium, outdoor garden podium, and sky terrace lounge. In addition, it operates Studio City, a cinematically-themed integrated entertainment, retail, and gaming resort that comprises 280 gaming tables and 980 gaming machines in Cotai, Macau. Further, the company owns and operates 7 Mocha Clubs with 1,034 gaming machines, as well as Taipa Square casino in Taipa Island, Macau. Additionally, it operates and manages City of Dreams Manila, a casino, hotel, retail, and entertainment integrated resort in the Entertainment City complex in Manila. The company was formerly known as Melco Crown Entertainment Limited and changed its name to Melco Resorts & Entertainment Limited in April 2017. Melco Resorts & Entertainment Limited was incorporated in 2004 and is based in Central, Hong Kong. As of February 16, 2017, Melco Resorts & Entertainment Limited operates as a subsidiary of Melco Leisure and Entertainment Group Limited.
About Universal Entertainment
Universal Entertainment Corporation, together with its subsidiaries, manufactures, develops, and sells pachislot and pachinko machines in Japan, Philippines, and internationally. The company operates in two segments, Amusement Equipment Business, and Integrated Resort Business. The company also develops and provides Falcon X, a peripheral system; Hot Stadium, a digital signage system; Universal Kingdom, a membership website for Android; and Slots Street, a social casino game; as well as operates OKADA MANILA, a casino resort in the Philippines. In addition, it operates casino, hotel, food and beverage, retail and leasing, entertainment, and real estate development businesses. The company was formerly known as Aruze Corp. and changed its name to Universal Entertainment Corporation in November 2009. Universal Entertainment Corporation was founded in 1969 and is headquartered in Tokyo, Japan.
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