Wynn Resorts Down to Neutral - Analyst Blog
30 Junho 2011 - 9:15AM
Zacks
We recently downgraded our rating
on Wynn Resorts Limited (WYNN) to Neutral from
Outperform. The company, along with its subsidiaries, is a leading
developer, owner and operator of destination casino resorts with
properties in Las Vegas and Macau.
The company, based in Nevada,
reported first quarter 2011 earnings above the Zacks Consensus
Estimate buoyed by booming Macau operations and improved
performance at Las Vegas. Given its strong brand name, we believe
that Wynn Resorts is well positioned to command a premium rate
compared to the overall gaming and lodging industry. The company is
well placed both strategically and financially. Wynn Resorts
also stands to gain market share as the economy progresses toward
recovery.
Wynn Macau’s contribution to the
company’s earnings has increased significantly in the last two
years. The resort currently generates over 69% of its revenues from
the region. Given the strong momentum in Macau, we expect the
company’s earnings to improve further going forward. Moreover, we
remain encouraged with the company’s strong brand name, a healthy
balance sheet, relatively low capital requirements and the ability
to execute in a difficult operating environment.
Furthermore, its Las Vegas
business, which was at its worst during the slowdown, is also
rebounding. However, recovery remains slow due to excess capacity
in the market. We believe many of the positive attributes are
reflected in the current share price leaving limited scope for
upside. Additionally, we remain cautious on the stock due to
limited diversity, stiff competition from Las Vegas Sands
Corp. (LVS) and MGM Resorts International
(MGM).
First Quarter 2011
Results
Wynn Resorts reported earnings of
$1.38 cents per share, surpassing the Zacks Consensus Estimate of
73 cents and last year's 27 cents.
The results were boosted by
higher-than-expected revenues. Net revenues advanced 38.7%
year over year to $1,260.3 million, outpacing the Zacks Consensus
Estimate of $1,133.0 million.
Revenue at Wynn Macau jumped 46.6%
year over year and Las Vegas operations were up 24.0%.
During the quarter, the company
also doubled its dividend to 50 cents per share.
Zacks Consensus
Estimate
In the last 7 days, none of the
analysts have budged and estimates remain unchanged for the second
quarter, fiscal 2011 and 2012, implying that the analysts do not
see any near term catalyst, which is in line with our Neutral
recommendation. The Zacks Consensus Estimates for the second
quarter, 2011 and 2012 are pegged at 91 cents, $4.26 and $5.06
respectively.
LAS VEGAS SANDS (LVS): Free Stock Analysis Report
MGM RESORTS INT (MGM): Free Stock Analysis Report
WYNN RESRTS LTD (WYNN): Free Stock Analysis Report
Zacks Investment Research
MGM Resorts (NYSE:MGM)
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