Melco Resorts & Entertainment (NASDAQ:MLCO) and GameStop (NYSE:GME) Financial Review

Melco Resorts & Entertainment (NASDAQ:MLCO) and GameStop (NYSE:GME) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Volatility & Risk

Melco Resorts & Entertainment has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, GameStop has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500.

Valuation and Earnings

This table compares Melco Resorts & Entertainment and GameStop”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	0.45	$43.54 million	$0.26	21.27
GameStop	$3.82 billion	2.76	$131.30 million	$0.82	28.75

GameStop has lower revenue, but higher earnings than Melco Resorts & Entertainment. Melco Resorts & Entertainment is trading at a lower price-to-earnings ratio than GameStop, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

39.6% of Melco Resorts & Entertainment shares are owned by institutional investors. Comparatively, 29.2% of GameStop shares are owned by institutional investors. 57.1% of Melco Resorts & Entertainment shares are owned by insiders. Comparatively, 8.6% of GameStop shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Melco Resorts & Entertainment and GameStop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Melco Resorts & Entertainment	2	3	4	1	2.40
GameStop	1	1	0	0	1.50

Melco Resorts & Entertainment presently has a consensus target price of $7.85, indicating a potential upside of 41.95%. GameStop has a consensus target price of $13.50, indicating a potential downside of 42.73%. Given Melco Resorts & Entertainment’s stronger consensus rating and higher probable upside, research analysts clearly believe Melco Resorts & Entertainment is more favorable than GameStop.

Profitability

This table compares Melco Resorts & Entertainment and GameStop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Melco Resorts & Entertainment	3.58%	-28.44%	3.55%
GameStop	11.08%	9.75%	5.80%

Summary

GameStop beats Melco Resorts & Entertainment on 8 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 GameStop

GameStop Corp., a specialty retailer, provides games and entertainment products through its stores and ecommerce platforms in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, and virtual reality products; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It sells collectibles comprising apparel, toys, trading cards, gadgets, and other retail products for pop culture and technology enthusiasts, as well as engages in the digital asset wallet and NFT marketplace activities. The company operates stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer magazine, a print and digital gaming publication. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.