Shareholders might have noticed that Wynn Macau, Limited (HKG:1128) filed its annual result this time last week. The early response was not positive, with shares down 7.3% to HK$11.70 in the past week. It was an okay report, and revenues came in at HK$36b, approximately in line with analyst estimates leading up to the results announcement. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the 19 analysts covering Wynn Macau provided consensus estimates of HK$27.1b revenue in 2020, which would reflect a substantial 25% decline on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 56% to HK$0.43 in the same period. In the lead-up to this report, the analysts had been modelling revenues of HK$28.2b and earnings per share (EPS) of HK$0.52 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
The analysts made no major changes to their price target of HK$18.92, suggesting the downgrades are not expected to have a long-term impact on Wynn Macau'svaluation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Wynn Macau at HK$27.50 per share, while the most bearish prices it at HK$10.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 25%, a significant reduction from annual growth of 14% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Wynn Macau's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Wynn Macau. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at HK$18.92, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Wynn Macau going out to 2023, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Wynn Macau (1 makes us a bit uncomfortable!) that we have uncovered.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.