Intrinsic value of Melco Resorts & Entertainment Limited - MLCO

Previous Close

$20.04

  Intrinsic Value

$40.02

stock screener

  Rating & Target

str. buy

+100%

Previous close

$20.04

 
Intrinsic value

$40.02

 
Up/down potential

+100%

 
Rating

str. buy

We calculate the intrinsic value of MLCO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.90
  15.71
  14.64
  13.68
  12.81
  12.03
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.21
  6.98
  6.79
  6.61
  6.45
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
Revenue, $m
  6,178
  7,149
  8,195
  9,316
  10,509
  11,773
  13,106
  14,508
  15,976
  17,511
  19,114
  20,783
  22,521
  24,328
  26,207
  28,159
  30,188
  32,296
  34,488
  36,767
  39,137
  41,604
  44,171
  46,846
  49,633
  52,538
  55,569
  58,732
  62,035
  65,484
Variable operating expenses, $m
  4,182
  4,821
  5,511
  6,249
  7,035
  7,867
  8,745
  9,668
  10,635
  11,646
  12,589
  13,688
  14,833
  16,023
  17,260
  18,546
  19,882
  21,271
  22,714
  24,215
  25,776
  27,401
  29,092
  30,853
  32,689
  34,603
  36,599
  38,682
  40,857
  43,129
Fixed operating expenses, $m
  1,129
  1,154
  1,180
  1,205
  1,232
  1,259
  1,287
  1,315
  1,344
  1,374
  1,404
  1,435
  1,466
  1,499
  1,532
  1,565
  1,600
  1,635
  1,671
  1,708
  1,745
  1,784
  1,823
  1,863
  1,904
  1,946
  1,989
  2,032
  2,077
  2,123
Total operating expenses, $m
  5,311
  5,975
  6,691
  7,454
  8,267
  9,126
  10,032
  10,983
  11,979
  13,020
  13,993
  15,123
  16,299
  17,522
  18,792
  20,111
  21,482
  22,906
  24,385
  25,923
  27,521
  29,185
  30,915
  32,716
  34,593
  36,549
  38,588
  40,714
  42,934
  45,252
Operating income, $m
  867
  1,173
  1,505
  1,862
  2,243
  2,647
  3,074
  3,524
  3,997
  4,491
  5,121
  5,660
  6,222
  6,807
  7,415
  8,048
  8,706
  9,391
  10,103
  10,844
  11,616
  12,419
  13,256
  14,129
  15,040
  15,990
  16,982
  18,018
  19,100
  20,232
EBITDA, $m
  1,558
  1,955
  2,385
  2,846
  3,339
  3,861
  4,413
  4,995
  5,604
  6,243
  6,909
  7,604
  8,328
  9,082
  9,866
  10,682
  11,530
  12,412
  13,329
  14,283
  15,277
  16,311
  17,388
  18,511
  19,683
  20,904
  22,180
  23,512
  24,903
  26,358
Interest expense (income), $m
  210
  224
  282
  346
  415
  489
  568
  651
  739
  831
  928
  1,029
  1,135
  1,245
  1,360
  1,479
  1,603
  1,731
  1,865
  2,004
  2,148
  2,299
  2,455
  2,617
  2,787
  2,963
  3,147
  3,338
  3,538
  3,746
  3,964
Earnings before tax, $m
  643
  891
  1,159
  1,446
  1,753
  2,079
  2,423
  2,785
  3,165
  3,563
  4,092
  4,525
  4,977
  5,447
  5,936
  6,445
  6,975
  7,526
  8,099
  8,696
  9,317
  9,964
  10,639
  11,343
  12,077
  12,843
  13,644
  14,480
  15,354
  16,268
Tax expense, $m
  174
  241
  313
  391
  473
  561
  654
  752
  855
  962
  1,105
  1,222
  1,344
  1,471
  1,603
  1,740
  1,883
  2,032
  2,187
  2,348
  2,516
  2,690
  2,873
  3,063
  3,261
  3,468
  3,684
  3,910
  4,146
  4,392
Net income, $m
  469
  650
  846
  1,056
  1,280
  1,518
  1,769
  2,033
  2,311
  2,601
  2,987
  3,303
  3,633
  3,976
  4,333
  4,705
  5,092
  5,494
  5,912
  6,348
  6,801
  7,274
  7,767
  8,280
  8,816
  9,376
  9,960
  10,570
  11,209
  11,876

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  10,401
  12,035
  13,797
  15,683
  17,692
  19,820
  22,064
  24,423
  26,896
  29,480
  32,178
  34,988
  37,914
  40,956
  44,119
  47,406
  50,821
  54,371
  58,061
  61,897
  65,887
  70,040
  74,362
  78,865
  83,557
  88,448
  93,551
  98,876
  104,435
  110,242
Adjusted assets (=assets-cash), $m
  10,401
  12,035
  13,797
  15,683
  17,692
  19,820
  22,064
  24,423
  26,896
  29,480
  32,178
  34,988
  37,914
  40,956
  44,119
  47,406
  50,821
  54,371
  58,061
  61,897
  65,887
  70,040
  74,362
  78,865
  83,557
  88,448
  93,551
  98,876
  104,435
  110,242
Revenue / Adjusted assets
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
Average production assets, $m
  7,340
  8,493
  9,736
  11,067
  12,485
  13,986
  15,570
  17,235
  18,980
  20,804
  22,707
  24,690
  26,755
  28,902
  31,133
  33,453
  35,863
  38,368
  40,972
  43,679
  46,495
  49,425
  52,476
  55,653
  58,964
  62,416
  66,016
  69,774
  73,697
  77,795
Working capital, $m
  -1,532
  -1,773
  -2,032
  -2,310
  -2,606
  -2,920
  -3,250
  -3,598
  -3,962
  -4,343
  -4,740
  -5,154
  -5,585
  -6,033
  -6,499
  -6,983
  -7,487
  -8,010
  -8,553
  -9,118
  -9,706
  -10,318
  -10,954
  -11,618
  -12,309
  -13,030
  -13,781
  -14,566
  -15,385
  -16,240
Total debt, $m
  4,870
  5,973
  7,162
  8,436
  9,792
  11,228
  12,743
  14,335
  16,004
  17,749
  19,569
  21,466
  23,441
  25,495
  27,630
  29,848
  32,154
  34,550
  37,040
  39,630
  42,323
  45,126
  48,044
  51,083
  54,250
  57,552
  60,996
  64,590
  68,343
  72,263
Total liabilities, $m
  7,021
  8,124
  9,313
  10,586
  11,942
  13,378
  14,893
  16,486
  18,155
  19,899
  21,720
  23,617
  25,592
  27,645
  29,780
  31,999
  34,304
  36,700
  39,191
  41,781
  44,474
  47,277
  50,195
  53,234
  56,401
  59,703
  63,147
  66,741
  70,494
  74,414
Total equity, $m
  3,380
  3,911
  4,484
  5,097
  5,750
  6,441
  7,171
  7,938
  8,741
  9,581
  10,458
  11,371
  12,322
  13,311
  14,339
  15,407
  16,517
  17,671
  18,870
  20,117
  21,413
  22,763
  24,168
  25,631
  27,156
  28,746
  30,404
  32,135
  33,941
  35,829
Total liabilities and equity, $m
  10,401
  12,035
  13,797
  15,683
  17,692
  19,819
  22,064
  24,424
  26,896
  29,480
  32,178
  34,988
  37,914
  40,956
  44,119
  47,406
  50,821
  54,371
  58,061
  61,898
  65,887
  70,040
  74,363
  78,865
  83,557
  88,449
  93,551
  98,876
  104,435
  110,243
Debt-to-equity ratio
  1.440
  1.530
  1.600
  1.650
  1.700
  1.740
  1.780
  1.810
  1.830
  1.850
  1.870
  1.890
  1.900
  1.920
  1.930
  1.940
  1.950
  1.960
  1.960
  1.970
  1.980
  1.980
  1.990
  1.990
  2.000
  2.000
  2.010
  2.010
  2.010
  2.020
Adjusted equity ratio
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  469
  650
  846
  1,056
  1,280
  1,518
  1,769
  2,033
  2,311
  2,601
  2,987
  3,303
  3,633
  3,976
  4,333
  4,705
  5,092
  5,494
  5,912
  6,348
  6,801
  7,274
  7,767
  8,280
  8,816
  9,376
  9,960
  10,570
  11,209
  11,876
Depreciation, amort., depletion, $m
  691
  782
  880
  984
  1,096
  1,214
  1,339
  1,470
  1,607
  1,751
  1,788
  1,944
  2,107
  2,276
  2,451
  2,634
  2,824
  3,021
  3,226
  3,439
  3,661
  3,892
  4,132
  4,382
  4,643
  4,915
  5,198
  5,494
  5,803
  6,126
Funds from operations, $m
  1,160
  1,432
  1,725
  2,040
  2,376
  2,732
  3,108
  3,503
  3,918
  4,352
  4,775
  5,247
  5,740
  6,252
  6,785
  7,339
  7,915
  8,515
  9,138
  9,787
  10,462
  11,166
  11,899
  12,662
  13,459
  14,290
  15,158
  16,064
  17,011
  18,002
Change in working capital, $m
  -222
  -241
  -260
  -278
  -296
  -313
  -331
  -348
  -364
  -381
  -397
  -414
  -431
  -448
  -466
  -484
  -503
  -523
  -544
  -565
  -588
  -612
  -637
  -663
  -691
  -721
  -752
  -784
  -819
  -855
Cash from operations, $m
  1,382
  1,673
  1,985
  2,318
  2,672
  3,045
  3,439
  3,851
  4,282
  4,733
  5,172
  5,662
  6,171
  6,700
  7,251
  7,823
  8,419
  9,038
  9,682
  10,352
  11,050
  11,777
  12,535
  13,326
  14,150
  15,011
  15,910
  16,849
  17,830
  18,857
Maintenance CAPEX, $m
  -494
  -578
  -669
  -767
  -871
  -983
  -1,101
  -1,226
  -1,357
  -1,494
  -1,638
  -1,788
  -1,944
  -2,107
  -2,276
  -2,451
  -2,634
  -2,824
  -3,021
  -3,226
  -3,439
  -3,661
  -3,892
  -4,132
  -4,382
  -4,643
  -4,915
  -5,198
  -5,494
  -5,803
New CAPEX, $m
  -1,061
  -1,153
  -1,243
  -1,331
  -1,417
  -1,502
  -1,584
  -1,665
  -1,745
  -1,824
  -1,903
  -1,983
  -2,064
  -2,147
  -2,232
  -2,319
  -2,410
  -2,505
  -2,604
  -2,707
  -2,816
  -2,930
  -3,050
  -3,177
  -3,311
  -3,452
  -3,601
  -3,758
  -3,923
  -4,098
Cash from investing activities, $m
  -1,555
  -1,731
  -1,912
  -2,098
  -2,288
  -2,485
  -2,685
  -2,891
  -3,102
  -3,318
  -3,541
  -3,771
  -4,008
  -4,254
  -4,508
  -4,770
  -5,044
  -5,329
  -5,625
  -5,933
  -6,255
  -6,591
  -6,942
  -7,309
  -7,693
  -8,095
  -8,516
  -8,956
  -9,417
  -9,901
Free cash flow, $m
  -174
  -58
  73
  220
  383
  561
  753
  960
  1,181
  1,415
  1,631
  1,890
  2,162
  2,447
  2,743
  3,052
  3,374
  3,709
  4,057
  4,419
  4,795
  5,186
  5,593
  6,016
  6,457
  6,916
  7,394
  7,893
  8,413
  8,956
Issuance/(repayment) of debt, $m
  1,013
  1,103
  1,189
  1,274
  1,356
  1,436
  1,515
  1,592
  1,669
  1,745
  1,821
  1,897
  1,975
  2,054
  2,135
  2,219
  2,306
  2,396
  2,491
  2,590
  2,693
  2,803
  2,918
  3,039
  3,167
  3,302
  3,444
  3,594
  3,753
  3,920
Issuance/(repurchase) of shares, $m
  23
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,036
  1,103
  1,189
  1,274
  1,356
  1,436
  1,515
  1,592
  1,669
  1,745
  1,821
  1,897
  1,975
  2,054
  2,135
  2,219
  2,306
  2,396
  2,491
  2,590
  2,693
  2,803
  2,918
  3,039
  3,167
  3,302
  3,444
  3,594
  3,753
  3,920
Total cash flow (excl. dividends), $m
  862
  1,045
  1,262
  1,494
  1,739
  1,997
  2,268
  2,553
  2,849
  3,159
  3,451
  3,787
  4,137
  4,500
  4,878
  5,271
  5,680
  6,105
  6,548
  7,008
  7,489
  7,989
  8,511
  9,056
  9,624
  10,218
  10,839
  11,487
  12,166
  12,876
Retained Cash Flow (-), $m
  -493
  -531
  -573
  -613
  -653
  -692
  -729
  -767
  -803
  -840
  -877
  -913
  -951
  -989
  -1,028
  -1,068
  -1,110
  -1,154
  -1,199
  -1,247
  -1,297
  -1,349
  -1,405
  -1,463
  -1,525
  -1,590
  -1,658
  -1,731
  -1,807
  -1,887
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  370
  514
  690
  881
  1,086
  1,306
  1,539
  1,786
  2,046
  2,319
  2,575
  2,874
  3,186
  3,511
  3,850
  4,203
  4,570
  4,951
  5,348
  5,762
  6,192
  6,640
  7,106
  7,592
  8,099
  8,628
  9,180
  9,757
  10,359
  10,989
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  353
  466
  591
  709
  818
  914
  995
  1,059
  1,104
  1,131
  1,125
  1,115
  1,087
  1,044
  986
  917
  840
  756
  670
  584
  499
  420
  346
  280
  222
  172
  130
  97
  70
  49
Current shareholders' claim on cash, %
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8

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.

FINANCIAL RATIOS  of  Melco Resorts & Entertainment Limited (MLCO)

Valuation Ratios
P/E Ratio 166.8
Price to Sales 6.5
Price to Book 8.8
Price to Tangible Book
Price to Cash Flow 25.4
Price to Free Cash Flow 82
Growth Rates
Sales Growth Rate 13.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate -11.2%
Financial Strength
Quick Ratio 24
Current Ratio 0
LT Debt to Equity 117.6%
Total Debt to Equity 120%
Interest Coverage 1
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 4.4%
Return On Total Capital 2.2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity 4.6%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 31.1%
Gross Margin - 3 Yr. Avg. 30.4%
EBITDA Margin 18.5%
EBITDA Margin - 3 Yr. Avg. 17.4%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 8%
Pre-Tax Margin 1.7%
Pre-Tax Margin - 3 Yr. Avg. 3.7%
Net Profit Margin 3.9%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 10.7%
Eff/ Tax Rate - 3 Yr. Avg. 3.2%
Payout Ratio 219.3%

MLCO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MLCO stock intrinsic value calculation we used $5285 million for the last fiscal year's total revenue generated by Melco Resorts & Entertainment Limited. The default revenue input number comes from 0001 income statement of Melco Resorts & Entertainment Limited. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MLCO stock valuation model: a) initial revenue growth rate of 16.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.8%, whose default value for MLCO is calculated based on our internal credit rating of Melco Resorts & Entertainment Limited, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Melco Resorts & Entertainment Limited.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MLCO stock the variable cost ratio is equal to 68%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1105 million in the base year in the intrinsic value calculation for MLCO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.8% for Melco Resorts & Entertainment Limited.

Corporate tax rate of 27% is the nominal tax rate for Melco Resorts & Entertainment Limited. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MLCO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MLCO are equal to 118.8%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Melco Resorts & Entertainment Limited operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MLCO is equal to -24.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2887.551 million for Melco Resorts & Entertainment Limited - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 489.634 million for Melco Resorts & Entertainment Limited is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Melco Resorts & Entertainment Limited at the current share price and the inputted number of shares is $9.8 billion.

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