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Wynn (WYNN) Up 13.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Wynn Resorts (WYNN - Free Report) . Shares have added about 13.5% in that time frame, outperforming the S&P 500.

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 catalysts.

Wynn Resorts Q3 Earnings Miss Estimates, Revenues Top

Wynn Resorts reported mixed third-quarter 2018 financial numbers, with earnings missing the Zacks Consensus Estimate and revenues surpassing the same.

Adjusted earnings of $1.68 per share missed the consensus mark of $1.77 by 5.1%. However, the bottom line increased 10.5% on a year-over-year basis. This improvement can be attributed to substantial rise in operating income from Wynn Palace, offset by a fall in Las Vegas operations.

Revenues totaled $1,709 million, which surpassed the consensus estimate of $1,638 million by 4.3%. The top line also improved 10.2% on significant contribution from Wynn Palace and Wynn Macau, offset by decrease in Las Vegas operations.

Concurrent with the earnings announcement, the company declared a quarterly cash dividend of 75 cents per share. The dividend will be payable on Nov 30, 2018, to shareholders of record as of Nov 21.

Wynn Palace Continues to Impress

Revenues from Wynn Palace totaled $730.6 million in the quarter, up 39.1% year over year. Casino revenues summed $625.6 million, up 39.9%. Furthermore, table games turnover in the VIP segment was $15.53 billion, up 13.4%. VIP table games win rate (based on turnover) was 3.4%, above the expected range of 2.7-3% and up 13.7% year over year. Table drop in the mass market segment was $1.19 billion, up 37.3% from the year-ago quarter. Meanwhile, table games win in mass market operations amounted to $308.1 million, up 58.6% year over year.

Non-casino revenues were $105 million, up 34.7% from the year-ago quarter. Also, room revenues totaled $44.3 million, up 50.1% from a year ago. Notably, average daily rate (ADR) came in at $275 (up 38.2%), occupancy was 96% (flat year over year) and revenue per available room (RevPAR) was $264 (surged 37.5%).

Robust Wynn Macau Operations

Wynn Macau revenues were up 3.1% year over year to $579.6 million in the quarter on higher non-casino revenues.

Notably, casino revenues in the reported quarter increased 0.9% to $503.6 million. Table games turnover in the VIP segment rose 4.4% to $13.97 billion. Moreover, the VIP table games win rate (based on turnover) was 3.01%, down 10.6% year over year but above the projected range of 2.7-3%.

Table drop in the mass market segment was $1.18 billion, up 10.6% year over year. Also, table games win in the mass market category amounted to $250.2 million, up 15.6%.

Non-casino revenues improved 20.3% to $76.1 million. Room revenues were up 20.7% year over year at $28.1 million. RevPAR also increased 18.2% in the third quarter to $273. While ADR rose 16% to $276, occupancy rate increased 170 bps to 99%.

Las Vegas Operations Disappoint

Revenues from Las Vegas operations declined 14.1% year over year to $398.9 million in the quarter under review.

The downside can be attributed to decline in both casino and non-casino revenues.

Casino revenues declined 28.4% to $92.9 million. Also, table games drop decreased 18.6% to $404 million. Table games win fell a massive 34.4% year over year to $86.7 million. Table games win percentage of 21.5% fell 19.2% from the year-ago quarter and was below the expected range of 22-26%.

Total non-casino revenues also fell 8.5% year over year to $306 million. Room revenues were down 5.9% to $110.7 million. During the quarter, RevPAR fell 4.8% to $259 owing to a 3% decrease in ADR. Occupancy rate was 89.6% compared with 91.4% in the year-ago quarter.

While food and beverage revenues decreased 7.3% to $148.6 million, entertainment, retail and other revenues were down 17.6% to $46.8 million.

Operating Performance

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) increased 6.6% year over year to $504.4 million on improvement at Wynn Palace, partially overshadowed by decrease in Las Vegas operations.

In the quarter, adjusted property EBITDA from Wynn Macau summed $182.9 million, flat year over year. The same from Wynn Palace surged 63.6% to $226.1 million. Adjusted property EBITDA from Las Vegas operations was down 37.1% to $95.3 million.

Cash Position

As of Sep 30, 2018, Wynn Resorts’ cash, cash equivalents and restricted cash totaled $1.95 billion.

Outstanding debt at the end of the third quarter amounted to $8.93 billion, including $3.10 billion of Wynn Las Vegas related debt, $4.24 billion of Macau debt and $985 million at the parent company and other.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -34.78% due to these changes.

VGM Scores

Currently, Wynn has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Wynn has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.




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