Wynn Resorts, Limited WYNN is likely to benefit from non-gaming revenue-boosting strategies, strong demand for sports betting and expansion efforts. Also, focus on gaming concession in Macau bodes well. However, a decline in traffic from pre-pandemic levels is a concern.
Let us discuss the factors that highlight why investors should retain the stock.
Factors Likely to Drive Growth
Wynn Resorts focuses on non-gaming avenues to drive growth. In first-quarter 2023, the company’s non-gaming business witnessed robust growth owing to strength across F&B and retail. During the quarter, non-gaming revenues increased 21% year over year to $50.9 million. The company emphasizes on introducing innovative non-gaming investments that drive increased tourism and strong shareholder returns. Attributes such as strong pipeline of forward group demand, continued rooms pricing power and a robust programming calendar bode well.
WYNN is benefiting from sound demand for sports betting. It collaborated with several engaging content creators to develop unique sports-themed program. During the first quarter of 2023, the company launched a retail sports betting at Encore Boston Harbor. Following the launch, the company reported a 20 increase in sign-ups (year-to-date) to its Wynn Rewards loyalty program. The company anticipates solid revenue generation on the back of new product features and a unique marketing campaign.
Wynn Resorts derives a solid share of revenues from Macau — the largest gaming destination in the world. Despite the coronavirus pandemic, the company is confident about prospects in Macau. The worst seems to be over for the gaming industry in Macau as China economy is slowly gaining momentum. During the fourth quarter of 2022, Wynn Resorts (Macau) entered into a 10-year agreement with the Macau government for the renewal of its gaming concession, covering Wynn Macau and Wynn Palace Cotai. For 2023, the company expects capex related to concession commitments in the range of $50-$220 million. The company is of the opinion that the proposed capex and programming will drive growth in the upcoming periods.
The emphasis on the expansion of new markets bodes well. Wynn Resorts and Marjan, RAK Hospitality Holding recently reached an agreement to develop a multibillion-dollar integrated resort on the artificial Al Marjan Island in Ras Al Khaimah, United Arab Emirates. This move marks Wynn Resorts’ foray into a new market. The resort is scheduled to open in 2026. This will mark the company’s first resort in the MENA region. During the first quarter of 2023, the company progressed with respect to the project design. Also, optimism can be noted due to opportunities arising from the backdrop of beachside setting development.
In the past year, shares of Wynn Resorts have gained 61.3% compared with the industry’s 29.6% growth.
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Although the company reported solid recovery in Macau and Las Vegas regions in the first quarter, a decline in visitation from pre-pandemic levels is a concern. During the quarter, the company witnessed soft international visitation particularly from Europe and Latin America. Also, disruptions related to the renovation-related closures of Wynn Macau's East casino, added to the downside.
Zacks Rank & Key Picks
Wynn Resorts currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are MGM Resorts International MGM, Boyd Gaming Corporation BYD and Crocs, Inc. CROX.
MGM Resorts sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 81%, on average. The stock has increased 17.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGM’s 2024 sales and EPS indicates a rise of 2.2% and 31%, respectively, from the year-ago period’s estimated levels.
Boyd Gaming carries a Zacks Rank #2 (Buy). BYD has a trailing four-quarter earnings surprise of 13.7%, on average. Shares of BYD have gained 21.4% in the past year.
The Zacks Consensus Estimate for BYD’s 2023 sales and EPS indicates a rise of 2.3% and 3.8%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 100.2% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13% and 5.6%, respectively, from the year-ago period’s levels.
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