How Did Wynn Resorts Perform In Q1?

by Trefis Team
Wynn Resorts
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Wynn Resorts (NYSE:WYNN) posted mixed earnings this time around, beating on earnings, but missing revenue consensus estimates. Despite the miss, revenues in the quarter came in about 21% higher than the year ago period, while earnings jumped by close to 80%. The revenue gain of nearly 21% y-o-y was driven by strong performance across its Vegas and Macau resorts, primarily driven by Wynn Palace. However, the one time $463 million litigation charge resulted in a net loss (in GAAP terms) for the company. 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. Below, we provide a brief overview of the company’s results and what lies ahead.

The company’s stock is now trading at around $190, and we believe it is undervalued in comparison to our price estimate of $203. We have created an interactive dashboard elaborating on our valuation estimates. Please click on the link to adjust drivers and arrive at your own price estimate.

Both the Macau resorts – Wynn Palace and Wynn Macau were the top performers in Q1’18, with revenue growing 45% and 11%, respectively, year-on-year, driven by strong performance in the VIP market and higher room occupancy. 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. Further, the addition of two new properties in Macau, and the expansion into Boston and Japan should provide long-term growth opportunities.

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