As of June 15, 2025, Melco Resorts & Entertainment Ltd's estimated intrinsic value ranges from $2.45 to $52.87 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $52.87 | +778.2% |
| Discounted Cash Flow (5Y) | $20.00 | +232.1% |
| Dividend Discount Model (Multi-Stage) | $14.52 | +141.2% |
| Dividend Discount Model (Stable) | $2.45 | -59.3% |
| Earnings Power Value | $4.60 | -23.6% |
Is Melco Resorts & Entertainment Ltd (MLCO) undervalued or overvalued?
With the current market price at $6.02, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Melco Resorts & Entertainment Ltd's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.82 | 1.15 |
| Cost of equity | 7.6% | 11.3% |
| Cost of debt | 5.1% | 5.5% |
| Tax rate | 0.4% | 1.6% |
| Debt/Equity ratio | 3.02 | 3.02 |
| After-tax WACC | 5.7% | 6.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $20 | $15,457M | 90.3% |
| 10-Year Growth | $53 | $28,772M | 80.9% |
| 5-Year EBITDA | $24 | $16,938M | 91.1% |
| 10-Year EBITDA | $40 | $23,608M | 76.7% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $575M |
| Discount Rate (WACC) | 6.9% - 5.7% |
| Enterprise Value | $8,346M - $10,095M |
| Net Debt | $7,358M |
| Equity Value | $988M - $2,737M |
| Outstanding Shares | 405M |
| Fair Value | $2 - $7 |
| Selected Fair Value | $4.60 |
| Metric | Value |
|---|---|
| Market Capitalization | $2438M |
| Enterprise Value | $9796M |
| Trailing P/E | 39.73 |
| Forward P/E | 41.83 |
| Trailing EV/EBITDA | 8.90 |
| Current Dividend Yield | 1405.50% |
| Dividend Growth Rate (5Y) | -74.32% |
| Debt-to-Equity Ratio | 3.02 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $15.86 |
| Discounted Cash Flow (5Y) | 25% | $5.00 |
| Dividend Discount Model (Multi-Stage) | 20% | $2.90 |
| Dividend Discount Model (Stable) | 15% | $0.37 |
| Earnings Power Value | 10% | $0.46 |
| Weighted Average | 100% | $24.59 |
Based on our comprehensive valuation analysis, Melco Resorts & Entertainment Ltd's weighted average intrinsic value is $24.59, which is approximately 308.5% above the current market price of $6.02.
Key investment considerations:
Given these factors, we believe Melco Resorts & Entertainment Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.