Head to Head Survey: Red Rock Resorts (RRR) versus Melco Crown Entertainment Limited (MLCO)

Red Rock Resorts (NASDAQ: RRR) and Melco Crown Entertainment Limited (NASDAQ:MLCO) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and target prices for Red Rock Resorts and Melco Crown Entertainment Limited, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Rock Resorts 0 2 9 0 2.82
Melco Crown Entertainment Limited 0 5 9 0 2.64

Red Rock Resorts presently has a consensus price target of $26.25, indicating a potential upside of 15.28%. Melco Crown Entertainment Limited has a consensus price target of $21.42, indicating a potential downside of 6.92%. Given Red Rock Resorts’ stronger consensus rating and higher probable upside, research analysts plainly believe Red Rock Resorts is more favorable than Melco Crown Entertainment Limited.

Dividends

Red Rock Resorts pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Melco Crown Entertainment Limited pays an annual dividend of $0.30 per share and has a dividend yield of 1.3%. Red Rock Resorts pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Melco Crown Entertainment Limited pays out 57.7% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Red Rock Resorts and Melco Crown Entertainment Limited’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Red Rock Resorts $1.56 billion 0.99 $497.16 million $0.48 47.44
Melco Crown Entertainment Limited $4.92 billion 2.30 $1.11 billion $0.52 44.25

Melco Crown Entertainment Limited has higher revenue and earnings than Red Rock Resorts. Melco Crown Entertainment Limited is trading at a lower price-to-earnings ratio than Red Rock Resorts, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Red Rock Resorts has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Melco Crown Entertainment Limited has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500.

Institutional & Insider Ownership

62.5% of Red Rock Resorts shares are held by institutional investors. Comparatively, 39.8% of Melco Crown Entertainment Limited shares are held by institutional investors. 40.9% of Red Rock Resorts shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Red Rock Resorts and Melco Crown Entertainment Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Rock Resorts 1.44% 14.05% 2.50%
Melco Crown Entertainment Limited 5.11% 9.20% 3.59%

Summary

Melco Crown Entertainment Limited beats Red Rock Resorts on 8 of the 15 factors compared between the two stocks.

Red Rock Resorts Company Profile

Red Rock Resorts, Inc. is a gaming, development and management company. The Company’s segments include Las Vegas operations, Native American management, and Corporate and other. The Las Vegas operations segment includes all of its Las Vegas area casino properties and the Native American management segment includes its Native American management arrangements. It provides gaming and entertainment for residents of the Las Vegas regional market and visitors. Its Las Vegas portfolio includes approximately 10 gaming and entertainment facilities and over 10 smaller casinos, offering approximately 20,300 slot machines, over 350 table games and approximately 4,750 hotel rooms. The Company offers a range of gaming and non-gaming entertainment options. It also controls over seven gaming-entitled development sites consisting of approximately 398 acres in Las Vegas and Reno, Nevada. The Company manages and owns interest in Station Casinos LLC, which is the provider of gaming and entertainment.

Melco Crown Entertainment Limited Company Profile

Melco Resorts & Entertainment Limited, formerly Melco Crown Entertainment Limited, is a holding company. The Company, through its subsidiaries, develops, owns and operates casino gaming and entertainment casino resort facilities in Asia. It is principally engaged in the gaming and hospitality business in Asia and its principal operating and developmental activities occur in over two geographic areas, which include Macau and the Philippines. Its segments include City of Dreams, Altira Macau, Studio City, Mocha Clubs, City of Dreams Manila, and Corporate and Others. It has over three casino based operations in Macau, namely, City of Dreams, Altira Macau and Studio City, and non-casino based operations in Macau at its Mocha Clubs. It also has a casino based operation in the Philippines, City of Dreams Manila. It is developing the fifth hotel tower at City of Dreams in Cotai, Macau. Its other operations also include Taipa Square Casino, Macau operating within Hotel Taipa Square.

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