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Why Is Wynn (WYNN) Down 0.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Wynn Resorts (WYNN - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Wynn due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Wynn Resorts' Q2 Earnings & Revenues Beat Estimates

Wynn Resorts, reported second-quarter 2019 financial numbers, wherein earnings and revenues surpassed the Zacks Consensus Estimate. While the bottom line outpaced the consensus mark for the second straight quarter, the top line beat the same for the fourth consecutive quarter. Adjusted earnings came in at $1.44 per share, exceeding the consensus mark of $1.42 but decreased 5.9% on a year-over-year basis. This downside can be attributed to a decline in operating income from the Macau operations, which overshadowed growth in Las Vegas operations.

Revenues totaled $1,658.3 million, which surpassed the consensus estimate of $1,600 million. The top line also increased 3.3% due to solid performance by Wynn Palace, Wynn Macau and Las Vegas operations.  Concurrent with the earnings announcement, the company declared a quarterly cash dividend of $1.00 per share. This dividend will be payable Aug 27, 2019, to its shareholders of record as of Aug 16.

Wynn Palace Continues to Impress

Revenues from Wynn Palace totaled $628.9 million in the second quarter, up 1.3% year over year. Casino revenues summed $528.5 million, up 0.7%. At the VIP segment, table games turnover was $13.39 billion, down 4.6% year over year. VIP table games win rate (based on turnover) was 3.02%, above the expected range of 2.7-3% and also up from 3% witnessed in the year-ago quarter. Table drop at the mass market segment was $1.27 billion, up 4% from the year-ago quarter. Furthermore, table games win in mass market operations amounted to $296.9 million, up 5.8% year over year.

Non-casino revenues summed $100.4 million, up 5% from the year-ago quarter. Also, room revenues totaled $43.2 million, up 6% from a year ago. Notably, average daily rate (ADR) came in at $265 (up 4.1%), occupancy was 97.4% (up 120 bps year over year) and revenue per available room (RevPAR) was $258 (surged 5.3%).

Wynn Macau Operations

Wynn Macau revenues inched up 0.6% year over year to $546.5 million in the second quarter due to an increase in casino revenues.  Notably, casino revenues in the reported quarter rose 1.7% to $481.2 million. However, table games turnover at the VIP segment declined 33.4% to $9.28 billion. In the meantime, the VIP table games win rate (based on turnover) was 3.3%, within the expected range of 2.7-3.0% and higher than the year-ago quarter figure of 2.56%.

Table drop at the mass market segment was $1.35 billion, up 4.2% year over year. Table games win in the mass market category amounted to $279.1 million, up 10.7%.

Non-casino revenues came in at $65.3 million, down 6.8% year over year. Room revenues declined 2.2% year over year at $26.5 million. RevPAR came in at $278, up 2.6% from the year-ago quarter figure. Also, ADR was $281, up 3.2% year over year.

Las Vegas Operations

Revenues from Las Vegas operations rose 5.1% year over year to $464.1 million in the quarter under review. The upside can be attributed to an increase in both casino and non-casino revenues.

Casino revenues jumped 17.7% to $119.8 million. Also, table games drop increased 9.2% to $440.8 million. Meanwhile, table games win rose 25.2% year over year to $126.4 million. Table games win percentage of 28.7% was up from 25% in the year-ago quarter and also more than the projected range of 22-26%.

Total non-casino revenues grew 1.3% year over year to $344.4 million. Room revenues increased 7.9% to $127.6 million. During the quarter, RevPAR surged 9.5% to $300. Occupancy rate was 90.1% compared with 87.7% in the year-ago quarter. While food and beverage revenues declined 3.3% to $165.2 million, entertainment, retail and other revenues inched up 1.8% to $51.6 million.

Operating Performance

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) increased 0.9% year over year to $480.6 million on robust performance by Wynn Macau and Las Vegas operations.

In the quarter under review, adjusted property EBITDA from Wynn Macau summed $175.9 million, up 1.7% year over year. However, the same from Wynn Palace declined 6.7% to $167.2 million. Adjusted property EBITDA from Las Vegas operations jumped 10.7% to $137.4 million.

Cash Position

As of Jun 30, 2019, Wynn Resorts’ cash, cash equivalents and restricted cash totaled $1.51 billion. Outstanding debt at the end of the second quarter amounted to $9.15 billion, including $3.11 billion of Wynn Las Vegas related debt, $3.71 billion of Macau debt and $983 million of Wynn America debt.

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 -14.29% due to these changes.

VGM Scores

At this time, Wynn has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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. Notably, 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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