Capcom (OTCMKTS:CCOEY – Get Free Report) and Melco Resorts & Entertainment (NASDAQ:MLCO – Get Free Report) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.
Profitability
This table compares Capcom and Melco Resorts & Entertainment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Capcom | 30.10% | 26.91% | 20.87% |
| Melco Resorts & Entertainment | 1.15% | -18.47% | 2.24% |
Earnings & Valuation
This table compares Capcom and Melco Resorts & Entertainment”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Capcom | $1.11 billion | 13.08 | $319.78 million | $0.44 | 31.07 |
| Melco Resorts & Entertainment | $4.64 billion | 0.90 | $43.54 million | $0.13 | 76.46 |
Capcom has higher earnings, but lower revenue than Melco Resorts & Entertainment. Capcom 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.
Institutional and Insider Ownership
39.6% of Melco Resorts & Entertainment shares are held by institutional investors. 57.1% of Melco Resorts & Entertainment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Capcom and Melco Resorts & Entertainment, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Capcom | 0 | 0 | 1 | 0 | 3.00 |
| Melco Resorts & Entertainment | 1 | 1 | 4 | 0 | 2.50 |
Melco Resorts & Entertainment has a consensus price target of $8.15, suggesting a potential downside of 18.01%. Given Melco Resorts & Entertainment’s higher probable upside, analysts plainly believe Melco Resorts & Entertainment is more favorable than Capcom.
Risk & Volatility
Capcom has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, Melco Resorts & Entertainment has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.
About Capcom
Capcom Co., Ltd. plans, develops, manufactures, sells, and distributes home video games, online games, mobile games, and arcade games in Japan and internationally. It operates through Digital Contents, Arcade Operations, Amusement Equipments, and Other Businesses segments. The Digital Contents segment develops and sells digital game content for consumer home video game platforms, as well as mobile content and PC online games. The Arcade Operations segment operates Plaza Capcom amusement facilities primarily in commercial complexes, as well as hosts various events. The Amusement Equipments segment is involved in the development, manufacture, and sale of software, frames and LCD devices for gaming machines. The Other Businesses segment engages in the adapting game content into movies, animated television programs, music CDs, and merchandise; and devoting resources to esports. Capcom Co., Ltd. was incorporated in 1979 and is headquartered in Osaka, Japan.
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.
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