Melco Resorts Posts Revenue Increase of 222% for Q2 2021
Melco Resorts have posted an enormous revenue figure for the second quarter of 2021, up 222% from last year for a total of $567 million. The strong financial performance for the previous 3 months highlights the quality of the strategy and planning being conducted at the casino. Share prices are up, but the company is not yet profitable, and whilst that situation remains it won’t be considered over the COVID fatigue of the previous year.
Melco Resorts has seen the value of its equity rise by approximately 11% over the last three months, due to soaring revenues ©stevepb/Pixabay
Share prices were up by 11.5% in Melco Resorts stock this week as investors interpreted the strong financial performance of the second quarter as a strong buy signal. The surge in price represents the enormous value that this stock is expected to generate over the course of the next 12 months. For all those holding and associated with Melco, this week’s financial earning announcement will be a cause for celebration.
The impressive revenue generated by the casino group in the previous 6 months shows the true mastery they have developed internally. Completely utilizing the assets of the business to generate revenue is the absolute mainstay of any management team. For the top brass at Melco to generate over $567 million on the top line is a fantastic achievement, representing an increase of 222%.
Adjusted earnings resultant from the Melco property before interest, depreciation, and amortization (EBITDA) saw a massive swing in fortunes going from negative $156 million to positive $79 million. This figure is simply a proxy used by accountants to measure the cash flow coming from a specific property. For the figure to be back in the positive realms is a big piece of good news at this point of the COVID recovery path.
Despite strong revenue returns, an increase in cash flow from properties, and a soaring share price, ultimately Melco Resorts did make a net loss in Q22021. The bottom line was therefore a net loss of $185.7 million, which was slightly larger than the original estimate. But despite the losses on the bottom line, investors are filled with confidence looking at the top line where revenue will drive the company back to brighter days.
Melco Resorts on a Recovery Trajectory
The releases of financial statements are an important moment for shareholders, lenders, clients, employees, and customers, as it gives a chance to see what is really happening internally at the company. Whilst accountants and auditors do their best to detail the exact situation of a company in black and white, it goes without saying that sometimes these statements can be inherently misleading.
Right now, there is clearly a recovery taking place at Melco and the company is on a trajectory that managers would have been desperately targeting since the beginning of the year. The underlying positive from all the good news coming out of Melco is the share price being up for the period. This increase in the value of the equity at Melco will keep the morale of everyone high.
Savvy investors looking at the Asian casino markets as a potential battleground for future buy investments will be wanting to pay close attention to Melco going into the next months. The company has many specific flags that point to future gains. Perhaps the biggest reason future gains are possible is the fact Melco Resorts and Entertainment sits in a secure market-leading position.
Furthermore, this company is capital-light, unlike some of its competitors that have a balance sheet heavier than a soviet tractor factory, Melco sits very agile and makes efficient use of its assets. The return on assets percentage is therefore very good. Melco’s business model has also proved to be highly scalable, with strong margins and consistent returns for its shareholders.
While COVID may have thrown a spanner in the works for all casinos operating in the same niche as Melco. The business has moved swiftly to ensure that its liquidity was healthy, and they are well-positioned to take advantage of the revival when it happens.
