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Non-Gaming Business to Aid Wynn Resorts' (WYNN) Q1 Earnings

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Wynn Resorts, Limited (WYNN - Free Report) is scheduled to release first-quarter 2018 results on Apr 24, after market close.

The company’s increasing focus on the non-gaming segment to drive revenues is expected to reflect in the to-be-reported quarter’s top line. Also, expansion in the domestic market along with improved tourism conditions are expected to have benefited the quarter’s revenues.

Higher margin contribution from a diversified business segment is expected to have favorably impacted the to-be-reported quarter’s earnings as well.

Meanwhile, the company’s shares have rallied 65% in the past year, outperforming the industry’s gain of 25.4%.

Let’s find out how the company’s results will look like in the first quarter.

Overall Top-Line Growth in the Cards

Wynn Resorts’ riveting growth potential lies in its business model that focuses both on gaming and non-gaming revenues. Also, relentless expansion in both the domestic and international markets, with openings of full-scale integrated resorts, is the key driver for top-line growth.

The company generates a solid share of its revenues from Macau operations. Given the decent visitation pattern in Macau, infrastructure development, and government’s efforts to boost tourism in Macau and non-gaming sources are expected to have boosted revenues in the to-be-reported quarter. The Zacks Consensus Estimate for first-quarter revenues from Macau operations is pegged at $634 million, reflecting an increase of 8% from the year-ago quarter.

Although revenues from the Las Vegas operations in the first quarter are expected to decline 3.4% year over year, an improving tourism industry and overall uplift in consumer discretionary spending are expected to aid the top line.

Nonetheless, the company’s overall top line is expected to have improved in the quarter. The consensus estimate for revenues in the first quarter is pegged at $1.70 billion, reflecting 15.5% year-over-year growth. In 2017, Wynn Resorts’ revenues were up 45.8% from the prior-year quarter and the upside trend is likely to continue.

Strong Margins to Aid Earnings

Wynn Resorts’ focus on the non-gaming business helps the company to consistently improve its margins. In 2017, the company’s Adjusted Property EBITDA margins were up 44.9% year over year. Margin improvement is likely to have continued in the first quarter as well.

Evidently, the consensus estimate for earnings in the first quarter is pegged at $1.95, reflecting 57.3% year-over-year improvement.

Our Quantitative Model Suggests a Beat

According to our quantitative model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has a fair chance of beating estimates. Meanwhile, stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided.

Wynn Resorts has a Zacks Rank #3 and an Earnings ESP of +0.62%, a combination that increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Wynn Resorts, Limited Price and EPS Surprise

Other Stocks to Consider

Here are a few other stocks from the same industry that are poised for an earnings beat this quarter.

Las Vegas Sands (LVS - Free Report) holds a Zacks Rank #3 and has an Earnings ESP of +2.84%. The company is scheduled to report quarterly results on Apr 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boyd Gaming (BYD - Free Report) carries a Zacks Rank #3 and has an Earnings ESP of +2.44%. The company is expected to report quarterly numbers on May 1.

Red Rock Resorts (RRR - Free Report) holds a Zacks Rank #3 and has an Earnings ESP of +1.37%. The company is anticipated to report quarterly results on May 3.

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