Wynn Resorts Pinned at Neutral - Analyst Blog
22 Maio 2013 - 2:30PM
Zacks
We remain Neutral on Wynn Resorts Limited
(WYNN) following announcement of strong first-quarter 2013 results
last month. However, competitive pressure in Macau keeps us on the
sidelines.
Why the Reiteration?
On Apr 25, 2013, Wynn Resorts reported its first-quarter 2013
adjusted earnings of $2.03 per share, which breezed past the Zacks
Consensus Estimate of $1.55 by 31.0% as well as the prior-year
earnings of $1.33 per share by 52.6%. The earnings upside can be
attributed to a strong mass market business in Macau, continued
demand in the Las Vegas market and operational efficiency. Net
revenue grew 5.0% year over year to nearly $1.4 billion bolstered
by a respective 4.4% and 6.6% increase in Macau and Las Vegas
revenues.
Macau, which is one of the largest gaming destinations in the
world, has been sluggish in the recent past. Wynn Macau experienced
weakness for three consecutive quarters in 2012. However, the
situation seems to have improved buoyed by the mass market boom in
the recently reported quarter. Moreover, its pipeline project in
the Cotai region of Macau is expected to expand Wynn’s operations
in Macau further.
At Las Vegas, the company is experiencing an uptrend as leisure
demand continues to improve with a gradual recovery of the U.S.
economy. Management remains hopeful as average daily rates are
trending higher. Also, in the domestic market, Wynn seeks to build
properties in higher-priced U.S. markets like Philadelphia and
Boston where room rates are very high.
However, despite these enthusiastic facts, some concerns prevent us
from being too optimistic on the stock. Fierce competition in
Macau, the only Chinese city where gambling is legal and which
accounts for around 70% of the company’s revenues, remains a
blemish on Wynn’s scorecard.
The company’s upcoming project at Cotai in Macau will also face
extreme peer pressure from several Chinese casino operators and the
U.S.-based company Las Vegas Sands Corp. (LVS).
Another U.S.-based casino giant, MGM Resorts
International (MGM) is also slated to come up with a
casino-resort in Cotai.
Wynn Resorts currently carries a Zacks Rank #2 (Buy). Another
player in the same industry, Monarch Casino & Resort
Inc. (MCRI) also looks attractive at current levels with a
Zacks Rank #1 (Strong Buy) .
LAS VEGAS SANDS (LVS): Free Stock Analysis Report
MONARCH CASINO (MCRI): Free Stock Analysis Report
MGM RESORTS INT (MGM): Free Stock Analysis Report
WYNN RESRTS LTD (WYNN): Free Stock Analysis Report
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