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Wynn (WYNN) Down 5.8% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Wynn Resorts (WYNN). Shares have lost about 5.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Wynn due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Wynn Resorts' Q3 Earnings & Revenues Miss Estimates

Wynn Resorts reported third-quarter 2019 financial numbers, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line beat their respective consensus mark in the preceding two quarters.

Adjusted earnings came in at 17 cents per share, which lagged the consensus mark of 88 cents. In the year-ago quarter, the company had reported earnings per share of $1.68. This downside was caused by decline in operating income from the Macau and Las Vegas operations.

Revenues totaled $1,647.8 million, which missed the Zacks Consensus estimate of $1,669 million. The top line also declined 3.6% due to dismal performance by Wynn Palace and Wynn Macau.

Concurrent with the earnings announcement, the company declared a quarterly cash dividend of $1.00 per share. The dividend will be payable on Nov 22, 2019, to its shareholders of record as of Nov 14.

Wynn Palace Operations

Revenues from Wynn Palace totaled $598.2 million in the third quarter, down 18.1% year over year. Casino revenues summed $497.7 million, down 20.4%. At the VIP segment, table games turnover was $10.52 billion, down 32.3% year over year. VIP table games win rate (based on turnover) was 3.19%, above the expected range of 2.7-3%, but down from 3.4% witnessed in the year-ago quarter. Table drop at the mass market segment was $1.3 billion, up 9.2% from the year-ago quarter’s figure. Furthermore, table games win in mass market operations amounted to $324.2 million, up 5.2% year over year.

Non-casino revenues summed $100.5 million, down 4.3% from the year-ago quarter’s figure. Also, room revenues totaled $44.9 million, up 1.3% year on year. Notably, average daily rate (ADR) came in at $273, flat year over year. Occupancy was 97.2%, up 120 basis points year over year. Revenue per available room (RevPAR) was $265, flat year over year.

Wynn Macau Operations

Wynn Macau revenues fell 18.2% year over year to $474.3 million in the third quarter due to decline in casino revenues. Notably, casino revenues in the reported quarter declined 18.8% to $408.8 million. Moreover, table games turnover at the VIP segment declined 42.5% to $8.02 billion. In the meantime, the VIP table games win rate (based on turnover) was 2.76%, within the expected range of 2.7-3.0% but lower than the year-ago quarter’s figure of 3.01%.

Table drop at the mass market segment was $1.32 billion, up 11.5% year over year. Table games win in the mass market category amounted to $272.5 million, up 8.9%. Non-casino revenues came in at $65.5 million, down 13.9% year over year. Room revenues declined 4.8% year over year at $26.7 million. RevPAR came in at $281, up 2.9% from the year-ago quarter’s figure. Also, ADR was $283, up 2.5% year over year.

Las Vegas Operations

Revenues from Las Vegas operations were $399.5 million, flat year over year. Casino revenues jumped 6.3% to $87 million. Also, table games drop increased 6.6% to $430.8 million. Meanwhile, table games win dropped 1.1% year over year to $85.7 million. Table games win percentage of 19.9% fell from 21.5% in the year-ago quarter and was also below the projected range of 22-26%.

Total non-casino revenues grew 2.1% year over year to $312.5 million. Room revenues increased 4.9% to $116.1 million. During the quarter, RevPAR surged 3.9% to $268. Occupancy rate was 87.9% compared with 89.6% in the year-ago quarter.

Food and beverage revenues came in at $149.7million, flat year over year. Entertainment, retail and other revenues were $46.7 million, flat year over year.

Operating Performance

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) declined 21.3% year over year to $396.9 million on dismal performance by Wynn Palace and Wynn Macau. In the quarter under review, adjusted property EBITDA from Wynn Macau summed $139 million, down 24% year over year. Moreover, the same from Wynn Palace declined 35% to $162.2 million. Adjusted property EBITDA from Las Vegas operations fell 7.6% year over year to $88 million.

Cash Position

As of Sep 30, 2019, Wynn Resorts’ cash, cash equivalents and restricted cash totaled $1.68 billion. Outstanding debt at the end of the third quarter amounted to $9.54 billion, including $4.06 billion of Macau related debt, $3.11 billion of Wynn Las Vegas debt, $1.76 billion of Wynn Resorts Finance debt, and $611 million of debt held by the retail joint venture.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -16.36% due to these changes.

VGM Scores

Currently, Wynn has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Wynn has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.



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