Earnings Preview: Wynn Resorts - Analyst Blog
18 Outubro 2011 - 8:30AM
Zacks
Wynn Resorts
Limited (WYNN), a leading developer, owner and operator of
destination casino resorts, is slated to release its third quarter
2011 results on Wednesday, October 19, after market closes. The
current Zacks Consensus Estimate for the third quarter is pegged at
$1.18 per share, representing an annualized growth of 202.6%.
With respect to earnings surprises,
Wynn Resorts has outperformed the Zacks Consensus Estimate in two
of the last four quarters. The company’s earnings surprise ranged
from negative 4.9% to positive 89.0% with the average at 31.7%.
This implies that the company has beaten the Zacks Consensus
Estimate by the same magnitude over the last four quarters.
Previous Quarter
Recap
During the quarter, Wynn Resorts
reported adjusted earnings of $1.60 per share, which trounced the
Zacks Consensus Estimate of 99 cents and improved considerably from
52 cents earned in the prior-year quarter.
The results were boosted by
higher-than-expected revenues. Net revenues increased 32.4% year
over year to $1,367.4 million. The out performance was primarily
attributable to the business boom in Macau and improved performance
at Las Vegas.
Revenues at Wynn Macau were up
36.7% year over year to $976.5 million and jumped 22.8% to $390.8
million at Las Vegas.
At the end of the quarter, Wynn
Resorts’ total cash balances were $1.7 billion.
Estimate Revisions
Trend
Estimates have not moved in the
last 30 days for the third quarter, implying that the analysts are
maintaining their view on the stock. The current Zacks Consensus
Estimate for 2011 and 2012 are $5.51 (reflecting year-over-year
growth of 161.4%) and $6.36 (reflecting year-over-year growth of
15.4%), respectively.
Agreement of Estimate
Revisions
Revision trend in the last 30 days
remain unclear for the third quarter, with one out of the 20
analysts raising the estimate while one lowering the same. In the
last 7 days, similar trend was witnessed, thus providing no clear
outlook.
For both fiscal 2011 and 2012, two
analysts raised their estimates while one slashed the same over the
last 30 days. In the last 7 days, one analyst increased the
estimate and one decreased the same for both the fiscal years,
indicating no clear direction.
The analysts have raised their
estimates based on the bullish view on Wynn Macau and improving
business at Las Vegas. However, one analyst reduced the estimate
based on the prevailing uncertain economic conditions resulting in
lower consumer spending.
Magnitude of Estimate
Revisions
Over the past 30 days, Wynn’s
estimate has been raised by a penny to $5.51 for fiscal 2011 and by
15 cents to $6.36 for fiscal 2012. However, for the third quarter,
the estimate remained unchanged at $1.18 .
Our Take
Currently, we expect Wynn Resort to
post third quarter results above the Zacks Estimate, given the
continued impressive results in Macau, improved property-level
EBITDA margins in Macau and stronger contributions from Encore
Macau. Moreover, with an increase in demand, business at Las Vegas
is stabilizing, which was worst hit due to the slowdown in
economy.
We remain positive on Wynn Resorts
as the company has strong brand equity and is strategically
positioned to command a premium rate relative to the overall gaming
and lodging industry. Moreover, we remain encouraged with the
company’s healthy balance sheet, relatively low capital
requirements and ability to execute in a difficult operating
environment.
However, we remain cautious on the
stock as the company is entirely dependent on its four properties
in Las Vegas and Macau. Moreover, Wynn Resorts operates in a highly
competitive Las Vegas and Macau marketplace and with more hotels
opening and promotional activities increasing in Macau and Las
Vegas, this could also result in excess supply and reduce the
company’s market share.
Additionally, any changes in
government policies, primarily in overseas countries, related to
the tax rates and gaming regulation can create a headwind for the
company.
Accordingly, we have a Zacks #2
Rank (short-term Buy rating) on the shares. We also reiterate our
long-term Neutral recommendation.
One of Wynn Resorts’ primary
competitors, MGM Resorts International
(MGM) is slated to release its third
quarter 2011 results on November 3, 2011.
MGM RESORTS INT (MGM): Free Stock Analysis Report
WYNN RESRTS LTD (WYNN): Free Stock Analysis Report
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