Is The Market Pricing Wynn Fairly?

by Trefis Team
Wynn Resorts
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Wynn Resorts (NASDAQ: WYNN) had a strong 2017, as its revenue grew by nearly 40% and the stock nearly doubled throughout the year. This strong growth occurred as a result of a jump in overall Macau casino revenue and a full operational year of Wynn Palace, its newest property in the Cotai region. We expect another strong year for Wynn, driven by strong growth in the Macau VIP market and its expansion into Boston should provide long-term growth opportunities. We are optimistic about these tailwinds, and this should help further propel the company’s stock.

We have created an interactive dashboard analysis to estimate Wynn’s valuation based on its expected revenues for 2018. You can modify the key value drivers to see how they impact the company’s revenues, bottom line, and valuation.

We have a $203 price estimate for Wynn’s stock, which is around 10% ahead of the market price, based on revenue projections of $7.05 billion for 2018, net income margin of about 12.5%, and a P/E multiple of 23x, which is slightly more 2017 levels but still lower than the industry average.

We expect Macau to be the driving force for Wynn in 2018, since the gaming revenues in the region grew consistently for the 20th straight month in March 2018. These tailwinds in the Macau casino market, coupled with its positioning in the VIP market, strategic alliance with Galaxy Entertainment Group,  and improving Chinese economy should provide for another year of robust growth for Wynn. The exit of Steve Wynn should have a limited impact on its Macau operations, while the expansion into Boston and Japan provide long-term growth opportunities.

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