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Wynn Resorts (WYNN) Up 2% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Wynn Resorts, Limited (WYNN - Free Report) . Shares have added about 2% in that time frame.

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 drivers.

Wynn Resorts Tops Q1 Earnings & Revenue Estimates

Wynn Resorts posted impressive results for first-quarter 2018, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $2.30 per share outpaced the Zacks Consensus Estimate of $1.96 by 17.4%. The bottom line also increased 79.7% on a year-over-year basis. This improvement can be attributed to substantial rise in operating income from Macau operations (Wynn Palace and Wynn Macau) and income tax benefit from U.S. tax reform, partially offset by a decrease in Redemption Note fair value.

Wynn Resorts’ revenues of $1.72 billion exceeded the Zacks Consensus Estimate of $1.71 billion by 0.4%. The top line also improved 20.5%, given significant contribution from Wynn Palace, Wynn Macau and Las Vegas operations.

Concurrent with the earnings announcement, the company raised its quarterly cash dividend by 50% to 75 cents per share. The dividend will be payable May 29, 2018 to shareholders of record as of May 17.

Wynn Macau Revenues Increase Y/Y

Wynn Macau revenues were up 11.9% year over year to $618.2 million in the quarter, courtesy of higher casino and non-casino revenues.

Notably, casino revenues increased 10.5% to $539 million. Table games turnover in the VIP segment surged 28.6% to $17.09 billion. However, the VIP table games win rate (based on turnover) was 2.61%, down 69 basis points (bps) year over year, and below the projected range of 2.7-3%.

Table drop in the mass market segment was $1.32 billion, up 16.4% year over year. Also, table games win in the mass market category amounted to $256.5 million, up 20.5%. Meanwhile, table games win percentage in mass market operations rose 19.4%, up 70 bps from the year-ago quarter.

Non-casino revenues improved 22.3% to $79.2 million. Room revenues were up 19% year over year at $28.4 million. Revenue per available room (RevPAR) also increased 21.5% in the quarter to $288 million. While, average daily rate (ADR) rose 17.8%, occupancy rate increased 330 bps to 99%.

Wynn Palace Continues to Impress

Revenues from Wynn Palace were $665.8 million in the quarter, up a massive 47.2% year over year. Casino revenues totaled $568.5 million, up 50.7%. Also, table games turnover in the VIP segment was $15.39 billion, up 39.3%. VIP table games win rate (based on turnover) was 2.60% lower than the expected range of 2.7-3% and down 43 bps year over year. Table drop in the mass market segment was $1.22 billion, surging 58.1% from the year-ago quarter. While table games win in mass market operations amounted to $310.2 million, up 85%, mass market win rate increased 370 bps to 25.5%.

Non-casino revenues were $97.4 million, up 29.5% from the year-ago quarter. Also, room revenues were $40.4 million, up 37.9% from the year-ago figure. Notably, ADR came in at $252 million (up 30.6%), occupancy was 96.8% (up 120 bps) and RevPAR was $244 million (surged 31.9%).

Las Vegas Operations Returns to Growth

Revenues from Las Vegas operations increased 3% year over year to $431.5 million in the quarter. The upside can be attributed to rise in both casino and non-casino revenues.

Casino revenues rose 8% to $134.6 million. Table games drop and table games win surged 17% and 18%, respectively. Table games win percentage of 28.8% increased 30 bps from the year-ago quarter and was above the expected range of 22-26%.

Total non-casino revenues also inched up 0.2% year over year to $296.8 million. Room revenues were up 5% to $121.5 million. During the quarter, RevPAR grew 5.2% to $285 million on the back of a 7.6% increase in ADR. Occupancy rate was 83.9% compared with 85.5% in the year-ago quarter.

While, food and beverage revenues increased 2% to $125.8 million, entertainment, retail and other revenues were down 6.3% to $49.6 million.

Solid Operating Performance at Wynn Macau & Wynn Palace

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 32% year over year to $564.3 million driven by increases at Wynn Macau, Wynn Palace and Las Vegas.

In the quarter, adjusted property EBITDA from Wynn Macau was $209.8 million, up 15.9% year over year, while the same from Wynn Palace surged 89.4% to $211.9 million. Adjusted property EBITDA from Las Vegas operations was up 6% to $142.6 million.

Cash Position

As of Mar 31, 2018, Wynn Resorts’ cash and cash equivalents, restricted cash and investment securities were $2.16 billion.

Outstanding debt at the end of the quarter totaled $9.36 billion, including $3.10 billion of Wynn Las Vegas related debt, $4.23 billion of Macau debt and $2.03 billion at the parent company and other.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. There have been four revisions higher for the current quarter compared to two lower.

Wynn Resorts, Limited Price and Consensus

 

VGM Scores

At this time, WYNN has a poor Growth Score of F, however its Momentum is doing a lot better with an A. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, WYNN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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