Critical Analysis: Melco Resorts & Entertainment (NASDAQ:MLCO) versus Candlewood Hotel (OTCMKTS:CNDL)

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

Institutional & Insider Ownership

39.6% of Melco Resorts & Entertainment shares are held by institutional investors. 57.1% of Melco Resorts & Entertainment shares are held by insiders. Comparatively, 30.9% of Candlewood Hotel shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Melco Resorts & Entertainment	-2.04%	-16.35%	1.73%
Candlewood Hotel	N/A	N/A	N/A

Analyst Ratings

This is a summary of current ratings and target prices for Melco Resorts & Entertainment and Candlewood Hotel, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Melco Resorts & Entertainment	0	1	4	0	2.80
Candlewood Hotel	0	0	0	0	0.00

Melco Resorts & Entertainment currently has a consensus price target of $9.82, indicating a potential upside of 64.21%. Given Melco Resorts & Entertainment’s stronger consensus rating and higher possible upside, equities analysts clearly believe Melco Resorts & Entertainment is more favorable than Candlewood Hotel.

Valuation & Earnings

This table compares Melco Resorts & Entertainment and Candlewood Hotel”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	$3.78 billion	0.70	-$326.92 million	($0.22)	-27.18
Candlewood Hotel	N/A	N/A	N/A	N/A	N/A

Candlewood Hotel has lower revenue, but higher earnings than Melco Resorts & Entertainment.

Summary

Melco Resorts & Entertainment beats Candlewood Hotel on 7 of the 9 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 Candlewood Hotel

Candlewood Hotel Company, Inc. operates, franchises, owns, and manages business-travel hotels. It offers studios, one-bedroom suites, and accommodations to mid-market business and personal travelers. Each hotel is equipped with an exercise room, a complimentary guest laundry facility, a dry cleaning drop, free local calls and long distance calls, and self-service packaged foods and beverages; and a free First Night Kit’ complete with items, such as coffee and popcorn. In addition, studio and one-bedroom suite offers amenities, such as two telephones, with two incoming direct dial lines and computer connections; an executive desk with a quad-outlet to accommodate office equipment needs, an executive chair, a bulletin board, a guest chair, and personalized remote accessible telephone mail; a television, video cassette player, and compact disc player; an iron and ironing board; and a kitchen. In addition, it operates recreational facilities, such as swimming pool and fitness center; a kitchen in every suite; a complimentary cooked to order’ breakfast; and a hospitality area for breakfast and socializing. The company was founded in 1995 and is based in Wichita, Kansas.