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Should Value Investors Buy Melco Resorts & Entertainment Limited (MLCO) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Melco Resorts & Entertainment Limited (MLCO - Free Report) . MLCO is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 14.49, while its industry has an average P/E of 33.84. Over the last 12 months, MLCO's Forward P/E has been as high as 38.28 and as low as 13.21, with a median of 18.39.

MLCO is also sporting a PEG ratio of 0.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MLCO's industry has an average PEG of 1.28 right now. Over the past 52 weeks, MLCO's PEG has been as high as 1.11 and as low as 0.38, with a median of 0.49.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MLCO has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.4.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Melco Resorts & Entertainment Limited is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MLCO feels like a great value stock at the moment.


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