Wynn Resorts, Limited WYNN is benefiting from improving visitation, strong brand recognition and sports betting expansion. However, dismal top and bottom-line performance due to the coronavirus pandemic hurt the performance. In the past six months, the company’s shares have gained 15.9%, compared with the industry’s rally of 18.9%. Let’s delve deeper.
Factors Likely to Drive Growth
Visitation is improving gradually in Macau. Wynn Resorts generated $43.9 million of EBITDA in the region. The company announced that momentum continued in April and May. During the Golden Week (the first week of May), it generated $3 million of normalized EBITDA per day. During the same time frame, the company generated 76% of its mass volumes. Its hotel occupancy during the Golden Week was 93%. The uptrend is likely to continue in June.
Wynn Resorts derives a solid share of revenues from Macau — the largest gaming destination in the world. Despite the coronavirus pandemic, the company is confident regarding prospects in Macau. In fact, the worst seems to be over for the gaming industry in Macau as China’s economy is slowly gaining momentum. In mid-July, Guangdong province lifted quarantine measures. Further, the country has commenced the issuance of non-tourist visas.
The company is committed to sport betting expansion in order to drive growth. In an effort to focus on online betting, the company announced the merger of Wynn Interactive into Austerlitz Acquisition Corp. Notably, the company will invest $640 million to drive growth. Meanwhile, WynnBET sports betting and online casino application have been operational in New Jersey for quite some time. During the fourth quarter, the company launched WynnBET online sports and casino offerings in Colorado and Michigan. It also secured market access in Indiana, Iowa and Ohio and received conditional licensing in Tennessee. The company has launched WynnBET in six states.
The company generates a solid share of revenues from Macau resorts. Apart from the gaming business in Macau, it has been increasingly focusing on driving non-gaming revenues. Given the decent visitation pattern in Macau prior to the coronavirus outbreak, infrastructure development and government’s efforts to boost tourism, non-gaming sources are expected to drive revenues in the days ahead.
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Wynn Resorts reported dismal first-quarter 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate for the seventh straight quarter. Both top and bottom lines declined sharply year over year. The company reported an adjusted loss of $2.41 per share, wider than the Zacks Consensus Estimate of a loss of $2. In the prior-year quarter, the company had reported adjusted loss of $3.54 per share. The top line also slumped 23.9% year over year due to a dismal performance by Wynn Palace, Wynn Macau and Las Vegas operations. Moreover, in the past 30 days, loss estimates for 2021 have widened to $4.98 from $4.27.
Zacks Rank & Key Picks
Wynn Resorts currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space include Boyd Gaming Corporation BYD, Red Rock Resorts, Inc. RRR and Corsair Gaming, Inc. CRSR. Boyd Gaming and Red Rock sport a Zacks Rank #1, while Corsair Gaming carries a Zacks Rank #2 (Buy).
Boyd Gaming has three-five-year earnings per share growth rate of 19.8%.
Red Rock has a trailing four-quarter earnings surprise of 166.2%, on average.
Corsair Gaming’s 2022 earnings are expected to rise 4.8%.
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Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
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