Back to top

Image: Bigstock

Here's Why You Should Retain Wynn Resorts' (WYNN) Stock

Read MoreHide Full Article

Wynn Resorts, Limited (WYNN - Free Report) is likely to benefit from sport betting expansion, non-gaming revenue boosting strategies and improving visitation. However, a decline in traffic from pre-pandemic levels is a concern.

Let us discuss the factors highlighting why investors should retain the stock for the time being.

Growth Catalysts

Wynn Resorts is committed toward sport betting expansion in order to boost growth. During the second quarter of 2021, Wynn Resorts made solid progress with reference to its online sports betting app — WynnBET. The company launched its web applications in Indiana, Colorado, Tennessee, New Jersey and Virginia. Also, it has strengthened third-party partnerships through agreements with the Detroit Lions, the Colorado Rockies and Cumulus Media.  The company collaborated with several engaging content creators to develop a sports-themed program. It has also secured market access in Arizona, Colorado, Indiana, Michigan, New Jersey, Tennessee and Virginia. With several pending license applications in process, WynnBET is poised for rapid expansion in 2021. Going forward, the company anticipates solid revenue generation on the back of new product features and unique marketing campaigns.

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. The government of China is considering measures to support Macau’s economy and introduce favorable policies, which is expected to improve visitation patterns as well as boost tourism and traffic in the region. Also, the government has enabled mainland cities to offer multi-entry permits. The company has been offering various promotional allowances and undertaking initiatives to attract gambling patrons. Also, it is undertaking several initiatives and building newer concepts to boost non-gaming revenues in Macau.

Nonetheless, the company witnessed gradual improvement in visitation, particularly in the Macau region. Casino visitation in Macau has increased considerably in the first week of September. Lei Wai Nong, the city’s secretary for economy and finance, stated that Macau registered 24,000 visitations last Tuesday compared with average daily visitation of 21,000 in the first half of 2020. Going forward, the company anticipates a more stabilized and normalized operating environment backed by ramped-up vaccination drives.

Concerns

Zacks Investment Research
Image Source: Zacks Investment Research

Shares of Wynn Resorts have fallen 8.2% so far this year against the industry’s growth of 4.2%. The dismal performance was primarily caused by the coronavirus pandemic. During the second quarter, the company’s operations were negatively impacted by the outbreak in Guangdong. Although the virus was stamped out within a couple of weeks, volumes were greatly suppressed during the period. Moreover, traffic was down in August due to the coronavirus-related alert. Also, the spread of the Delta variant is another concern. Although visitation is likely to improve in the coming months, it is expected to take time to attain the pre-pandemic levels. Considering the uncertainties related to the crisis, the company expects the pandemic to continue affecting its operations for some time.

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 - Free Report) , Golden Entertainment, Inc. (GDEN - Free Report) and Monarch Casino & Resort, Inc. (MCRI - Free Report) , each sporting a Zacks Rank #1.

Boyd Gaming has a three-five year earnings per share growth rate of 40.8%.

Golden Entertainment’s 2021 earnings are expected to surge 226.4%.

Monarch Casino has a trailing four-quarter earnings surprise of 53.3%, on average.

Published in