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Wynn Resorts (WYNN) Rises 19% in 3 Months: More Room to Run?

·4 min read

Shares of Wynn Resorts, Limited WYNN have gained 18.7% in the past three months compared with the industry’s rally of 21.6%. The company is benefiting from improved non-gaming revenues and expansion in domestic markets. The focus on WynnBET also bodes well. However, dismal performance in Macau hurts the company. Let’s delve deeper.

Growth Drivers

The company generates a solid share of revenues from Macau resorts. Apart from the gaming business in Macau, it has been increasingly focusing on driving non-gaming revenues. In the second quarter of 2022, the company’s non-gaming business witnessed robust growth, owing to strength across F&B and retail.

During the first quarter of 2022, the company emphasized on the Las Vegas market, thereby making significant additions to the non-gaming business. The company opened Delilah and Casa Playa, remodeled the Wind Tower rooms and restructured lounges adjacent to the Lake of Dreams. The company remains optimistic and anticipates the initiatives to drive revenues in the upcoming periods.

Moreover, the company’s full-scale integrated resort in Cotai, Macau, is poised to witness increased visits from tourists and leisure gamblers over the long term, which should fortify its position in the Cotai strip. Notably, such projects are expected to draw business and leisure travelers and provide a solid platform for growth.

On the other hand, Wynn Resorts, Marjan and RAK Hospitality Holding recently agreed 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.

The luxury hotel will have more than 1,000 rooms, top-notch shopping venues, state-of-the-art meeting and a convention facility, an exclusive spa and more than 10 restaurants and lounges. During the second quarter of 2022, the company stated to have progressed with respect to the project design. Also, optimism can be noted on account of opportunities arising from the backdrop of beachside setting development.

The company is focusing on sports betting expansion to drive growth. In an effort to focus on online betting, the company announced the merger of Wynn Interactive into Austerlitz Acquisition Corp. During the second quarter of 2022, Wynn Interactive generated nearly $704 million in turnover across casino and sports betting. The company anticipates solid revenue generation on the back of new product features and a unique marketing campaign.

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Concerns

During second-quarter 2022, the company witnessed a dismal performance in the Macau region, owing to subdued visitation. During the second quarter, Wynn Macau’s revenues amounted to $58.6 million compared with $184 million reported in the prior-year quarter. The downside was primarily due to a fall in the casino, rooms and entertainment, retail and other revenues. Notwithstanding the easing of certain COVID-19 protective measures by authorities worldwide, certain travel restrictions, quarantine measures, testing requirements and capacity limitations remain in effect at its Macau Operations. Given the uncertainties revolving around the crisis, the company expects the pandemic to keep affecting operations for some time.

Zacks Rank & Key Picks

Wynn Resorts currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Consumer Discretionary sector are Marriott Vacations Worldwide Corporation VAC, Hyatt Hotels Corporation H and Choice Hotels International, Inc. CHH. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Marriott Vacations sports a Zacks Rank #1. VAC has a trailing four-quarter earnings surprise of 13.9%, on average. The stock has declined 6% in the past year.

The Zacks Consensus Estimate for VAC’s current financial year sales and earnings per share (EPS) indicates an increase of 19.7% and 131.4%, respectively, from the year-ago period’s reported levels.

Hyatt carries a Zacks Rank #2 (Buy). H has a trailing four-quarter earnings surprise of 798.8%, on average. The stock has increased 24% in the past year.

The Zacks Consensus Estimate for H’s current financial year sales and EPS indicates growth of 89.1% and 13%, respectively, from the year-ago period’s reported levels.

Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 3.7% in the past year.

The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 25.3% and 21.7%, respectively, from the year-ago period’s reported levels.


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