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Why Is Wynn (WYNN) Up 41.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Wynn Resorts (WYNN - Free Report) . Shares have added about 41.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wynn due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Wynn Resorts Q3 Earnings & Revenues Miss Estimates

Wynn Resorts reported dismal third-quarter 2020 results, wherein earnings and revenues missed the Zacks Consensus Estimate for the fifth straight quarter. Moreover, the top and the bottom line declined on a year-over-year basis.

Q3 Earnings and Revenues

The company reported an adjusted loss of $7.04 per share, wider than the Zacks Consensus Estimate of a loss of $3.32. In the prior-year quarter, the company had reported adjusted earnings per share of 17 cents per share.

Revenues during the third quarter came in at $370.5 million, missing the Zacks Consensus Estimate of $460 million. The top line also declined 77.5% year over year owing to dismal performance by Wynn Palace, Wynn Macau and Las Vegas operations.

Wynn Palace Disappoints

During the third quarter, revenues from Wynn Palace totaled $15.7 million in the third quarter, down 97.4% year over year. Casino revenues were $12.3 million, down 97.5% year over year. Rooms; food and beverage; and entertainment, retail and other revenues also declined 90%, 77.3%, 131.4%, to $4.5 million, $6.9 million and ($8) million, respectively.

At the VIP segment, table games turnover was $311.7 million, down 97% year over year. VIP table games win rate (based on turnover) was 1.04%, below the expected range of 2.7-3%. It was also lower than 3.19% witnessed in the year-ago quarter. Table drop at the mass market segment was $86.3 million, down 93.4% from the year-ago quarter. Furthermore, table games win in mass market operations amounted to $19 million, down 94.1% year over year.

Notably, average daily rate (ADR) was $225 (down 17.6%, year over year). Occupancy was 11.6% (compared with 97.2% reported in the prior-year quarter). Meanwhile, revenue per available room (RevPAR) came in at $26 (down 90.2%, year over year).

Wynn Macau Operations

During the third quarter, Wynn Macau revenues were down 89.2% year over year to $51.4 million. The downside was due to a decline in casino, rooms, food and beverage, and entertainment, retail and other revenues.

Notably, casino revenues in the reported quarter plunged 93.4% to $27.2 million. Rooms; food and beverage; and entertainment, retail and other revenues declined 81.5%, 71.4% and 28.6%, to $4.9 million, $5.6 and $13.7 million, respectively.

Table games turnover at the VIP segment declined 93.8% to $498.5 million. However, the VIP table games win rate (based on turnover) was 3.95%, higher than expected range of 2.7% to 3.0%. It was also higher than 2.76% reported in the prior-year quarter.

Table drop at the mass market segment was $133 million, down 89.9% year over year. Table games win in the mass market category was $24.9 million, down 90.9%.

Notably, ADR was $291 (up 2.8%, year over year). Meanwhile, occupancy was 16.6% compared with 99.4% in the prior-year quarter. RevPAR was $48, down 82.9%, year over year.

Las Vegas Operations

During the third quarter, revenues from Las Vegas operations were down 53.3% year over year to $186.7 million due to weak occupancy levels.

Casino and food and beverage revenues plunged 24.5% and 63.2% to $65.7 million and $55 million, respectively. Rooms and entertainment, retail and other revenues also decreased 61.3% and 55.1% to $45 million and $21 million, respectively.
    
Further, table games drop fell 24.6% to $324.9 million. Meanwhile, table games win witnessed a decline of 23.5% year over year to $65.6 million. During the third quarter, table games win percentage of 20.2% was below the projected range of 22-26% but above 19.9% reported in the prior year quarter.

During the reported quarter, RevPAR declined 61% year over year to $105. Occupancy rate was 39.2%, down from 87.9% from the prior-year period. ADR was $269, down 12.1% year over year.

Encore Boston Harbor

Encore Boston Harbor closed all operations on Mar 15 for remainder of the first quarter and second-quarter 2020. On Jul 10, Encore Boston Harbor reopened operations. Adjusted property EBITDA from Encore Boston Harbor for third-quarter 2020 was $26 million.

Operating Performance

During the third quarter, adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) was ($65.9) million. In the prior-year quarter, the company had reported adjusted property EBITDA of $396.9 million.

In the quarter under review, adjusted property EBITDA from Macau totaled ($112.1) million against $301.2 million reported in the prior-year quarter. Adjusted property EBITDA from Las Vegas operations was $20.3 million, compared with $88.0 million in the prior-year quarter.

Cash Position

As of Sep 30, 2020, Wynn Resorts’ cash and cash equivalents totaled $3.55 billion.

Outstanding debt at the end of the third quarter amounted to $12.79 billion, including $3.12 billion of Wynn Las Vegas related debt, $5.96 billion of Macau debt, $3.10 billion of Wynn Resorts Finance debt, and $612.2 million of debt held by the retail joint venture, which the company consolidated.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -10.02% due to these changes.

VGM Scores

Currently, Wynn has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Wynn has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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