Melco Resorts & Entertainment (NASDAQ:MLCO) vs. Planet Fitness (NYSE:PLNT) Critical Analysis

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

Institutional & Insider Ownership

39.6% of Melco Resorts & Entertainment shares are owned by institutional investors. Comparatively, 95.5% of Planet Fitness shares are owned by institutional investors. 57.1% of Melco Resorts & Entertainment shares are owned by insiders. Comparatively, 0.9% of Planet Fitness shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Melco Resorts & Entertainment	2	2	5	1	2.50
Planet Fitness	1	9	11	1	2.55

Melco Resorts & Entertainment presently has a consensus target price of $7.27, suggesting a potential upside of 43.61%. Planet Fitness has a consensus target price of $70.24, suggesting a potential upside of 41.18%. Given Melco Resorts & Entertainment’s higher possible upside, analysts plainly believe Melco Resorts & Entertainment is more favorable than Planet Fitness.

Valuation & Earnings

This table compares Melco Resorts & Entertainment and Planet Fitness”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Melco Resorts & Entertainment	$5.16 billion	0.37	$185.04 million	$0.60	8.43
Planet Fitness	$1.32 billion	2.84	$219.10 million	$2.95	16.86

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

Volatility & Risk

Melco Resorts & Entertainment has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Planet Fitness has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Melco Resorts & Entertainment	4.50%	-23.81%	3.18%
Planet Fitness	16.88%	-59.46%	8.60%

Summary

Planet Fitness beats Melco Resorts & Entertainment on 10 of the 14 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 Planet Fitness

Planet Fitness, Inc., together with its subsidiaries, franchises and operates fitness centers under the Planet Fitness brand. The company operates through three segments: Franchise, Corporate-Owned Stores, and Equipment. The company is involved in franchising business in the United States, Puerto Rico, Canada, Panama, Mexico, and Australia. It engages in the sale of fitness equipment to franchisee-owned stores in the United States, Canada, and Mexico. In addition, the company operates corporate-owned stores in the United States and Canada. Planet Fitness, Inc. was founded in 1992 and is headquartered in Hampton, New Hampshire.