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Wynn Resorts (WYNN) Q3 Earnings: What's Up this Season?


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Wynn Resorts Ltd. (WYNN - Analyst Report) is likely to report third-quarter 2016 numbers on Oct 13, after market close.

Last quarter, Wynn Resorts posted a 10.31% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 23.27%.

Let’s see how things are shaping up for this announcement.

WYNN RESRTS LTD Price and EPS Surprise



Factors Likely to Influence this Quarter

Per the Macau Gaming Inspection and Coordination Bureau, though gross gaming revenues (GGR) for the month of July fell 4.5%, it rose in August and September by 1.1% and 7.4%, respectively, on a yearly basis, indicating that the Macau market might be on the recovery path.

Notably, the opening of Wynn Resorts’ Wynn Palace (opened on Aug 22) was the major reason for the turnaround in gambling revenues in Macau as it attracted tourists and leisure gamblers. In fact, the company’s consistent efforts to boost tourism and traffic in Macau yielded positive results in second-quarter 2016 as well as Wynn Macau revenues increased 3.6% year over year in the quarter. We thus expect the momentum to continue in the to-be reported quarter propelled by new resort addition and provision of better non-gaming options.

Meanwhile, the company’s properties in Las Vegas are likely to continue to cash in on the positive trends of improving employment rate and increasing tourism numbers in the region, thereby boosting the to-be-reported quarter’s top and bottom line growth.

However, higher promotional allowances and distribution of higher incentives in the slots as well as in the mass market to hold market share might hamper the quarter’s profitability.

Earnings Whispers

Our proven model does not conclusively show that Wynn Resorts is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as explained below.

Zacks ESP: Wynn Resorts has an Earnings ESP of -3.85%. This is because the Most Accurate estimate stands at 75 cents per share while the Zacks Consensus Estimate is pegged higher at 78 cents.

Zacks Rank: Wynn Resorts has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some restaurant companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corporation (BYD - Snapshot Report) has an earnings ESP of +20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Las Vegas Sands Corp. (LVS - Analyst Report) has an earnings ESP of +1.69% and a Zacks Rank #3.

Churchill Downs Inc. (CHDN - Snapshot Report) has an earnings ESP of +1.14% and a Zacks Rank #3.

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