Wynn Resorts, Limited (WYNN - Free Report) had a marvelous run on the bourses in 2017, surging a whopping 94.9% compared with its industry’s gain of 43.1% and the S&P 500’s rally of 19.8%.
Given its strong brand recognition and improving non-gaming revenues, coupled with expansion in the domestic market, we believe that the stock has a decent upside potential.
Let’s see what the New Year holds in store for Wynn Resorts.
Strong Brand Name to Continue Offering Competitive Advantage
Wynn Resorts’ strong brand name allows it to command a premium rate, relative to its peers in the gaming and lodging industry. Moreover, with a gradual revival of the U.S. economy, we expect Wynn to gain market share and grow strategically in 2018.
Non-Gaming Sources to Boost Revenues
Apart from the gaming business in Macau, the company has been increasingly focusing on boosting non-gaming revenues. Given the decent visitation pattern in Macau, infrastructure development and government’s efforts to boost tourism in Macau, non-gaming sources are expected to boost revenues, going forward.
Wynn Resorts, Limited Revenue (TTM)
Moreover, the company’s full-scale integrated resort in Cotai, Macau, opened in August 2016. The resort is poised to witness increased visits from tourists and leisure gamblers over the long term, which should fortify the company’s position in the Cotai strip. Notably, such projects are expected to draw business and leisure travelers, and provide a solid platform for growth. In fact, building resorts in Asia should help the company to capitalize on the strong consumer spending trend in the region.
Tourism & Traffic in Macau to Grow
The government of China is considering measures to support Macau’s economy and introduce favorable policies, which is expected to improve visitation pattern, and boost tourism and traffic. These include the approval of Macau’s maritime expansion plans that are expected to aid shipping and tourism. Also, the government has enabled Mainland China cities to offer multi-entry permits. Moreover, the government has plans of going easy on the smoking ban in casinos which might thereby provide a boost to traffic and revenues.
Meanwhile, Wynn Resorts too has been offering various promotional allowances and undertaking initiatives to attract gambling patrons.
Expansion in Domestic Market to Reap Benefits
In order to boost performance in Las Vegas, the company has remodeled rooms at its properties and the baccarat pit. Though tourism in Las Vegas has not yet reached the pre-recession level, it is on its way to recovery. The number of visits has been increasing every year.
With an improving job scenario and stabilizing gas prices, the consumer spending environment in the domestic markets is picking up. Backed by the optimism surrounding tourism in Las Vegas and increasing visitation pattern, revenues are likely to grow.
Upward Estimate Revisions for 2018
Analysts have increased their 2018 estimates for the company, making the earnings picture favorable. Over the past 60 days, three estimates have gone up compared with no downward revision for the year. This trend has caused the Zacks Consensus Estimate to rise, from $6.42 a share 60 days ago to its current level of $6.68 for the year.
Zacks Rank and Growth Score
The company has a Zacks Rank #2 (Buy) and a Growth Score of A, indicating that it is an impressive choice for growth investors.
Other top-ranked stocks in the Zacks Consumer Discretionary sectorare Melco Resorts & Entertainment (MLCO - Free Report) , Boyd Gaming Corporation (BYD - Free Report) and Hilton Worldwide Holdings (HLT - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Melco Resorts, Boyd Gaming and Hilton are expected to witness a respective 19.8%, 31.7% and 27.7% increase in 2018 earnings.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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