It has been about a month since the last earnings report for Wynn Resorts (NASDAQ:WYNN). Shares have lost about 29.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Wynn Resorts' Q4 Earnings & Revenues Miss Estimates
Wynn Resorts reported fourth-quarter 2019 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate for the second straight quarter.
The company reported an adjusted loss of 62 cents per share, missing the Zacks Consensus Estimate of earnings of 85 cents. In the prior-year quarter, the company had reported adjusted earnings per share of 95 cents. In the reported quarter, the bottom line was hurt by operating loss at Encore Boston Harbor. Macau and Las Vegas operations also reported decline in operating income. Revenues totaled $1,653.5 million, which lagged the Zacks Consensus Estimate of $1,718 million. The top line also decreased 2% thanks to dismal performance by Wynn Palace, Wynn Macau and Las Vegas operations.
Concurrent with the earnings announcement, the company declared a quarterly cash dividend of $1.00 per share. This dividend will be payable Mar 6, 2020, to its shareholders of record as of Feb 26.
Wynn Palace Disappoints
Revenues from Wynn Palace totaled $590 million in the third quarter, down 20.3% year over year. Casino revenues amounted to $490.4 million, down 23%. Rooms, food and beverage, and entertainment, retail and other also declined 3.2%, 1.4%, 7.5%, to $43.2 million, $29.7 million and $26.7 million, respectively. At the VIP segment, table games turnover was $9.31 billion, down 42.4% year over year. VIP table games win rate (based on turnover) was 3.07%, above the expected range of 2.7-3% but below 3.25% witnessed in the year-ago quarter. Table drop at the mass market segment was $1.25 billion, up 3.6% from the year-ago quarter. Furthermore, table games win in mass market operations amounted to $315.4 million, up 2.6% year over year.Notably, average daily rate (ADR) came in at $268 (down 3.2%), occupancy was 96.9% (down 30 basis points year over year) and revenue per available room (RevPAR) was $260 (down 3.3%).
Wynn Macau Operations
Wynn Macau revenues were down 5.1% year over year to $525.4 million in the fourth quarter on account of decrease in casino, rooms, food and beverage, and entertainment, retail and other revenues. Notably, casino revenues in the reported quarter dipped 1.7% to $455.9 million. Rooms, food and beverage, and entertainment, retail and other revenues declined 5.8%, 1.4% and 13%, to $28.3 million, $20.9 and $20.2 million, respectively. Table games turnover at the VIP segment declined 37.9% to $7.9 billion. Meanwhile, the VIP table games win rate (based on turnover) was 3.27%, above the expected range of 2.7-3.0% and higher than the year-ago quarter figure of 2.86%. Table drop at the mass market segment was $1.39 billion, up 10.6% year over year. Table games win in the mass market category amounted to $283.2 million, up 10.7%. Notably, average daily rate (ADR) came in at $291 (down 1%), occupancy was 99.3% (flat year over year) and revenue per available room (RevPAR) was $289 (down 1%).
Las Vegas Operations
Revenues from Las Vegas operations were down 6.3% year over year to $368.8 million in the quarter under review. The downside can primarily be attributed to decline in casino revenues. Casino and food and beverage revenues dropped 27.8% and 1.3%, to $75.7 million and $120.3 million, respectively. Rooms and entertainment, retail and other revenues increased 2.1% and 7%, to $120.3 million and $52.5 million, respectively. Further, table games drop decreased 18.5% to $414.5 million. Meanwhile, table games win witnessed a sharp decline of 36.8% year over year to $71.9 million. Table games win percentage of 17.4% was down from 22.4% in the year-ago quarter and also below the projected range of 22-26%. During the quarter, RevPAR increased 3.2% to $288. Occupancy rate was 89.4%, down 20 basis points from the prior-year period. ADR came in at $322, up 2.2%, year over year.
Encore Boston Harbor
The company, which opened Encore Boston Harbor on Jun 23, 2019, reported revenues of $169.3 million. Table games win was 19.2%, within company’s expected range of 16-20%. Occupancy was 76%, while ADR and RevPAR were $352 and $267, respectively.
Operating Performance
Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) decreased 11.3% year over year to $443.1 million on dismal performance by Wynn Macau and Las Vegas operations. In the quarter under review, adjusted property EBITDA from Macau totaled $347.7 million, down 11.8% year over year. Adjusted property EBITDA from Las Vegas operations jumped 23.8% to $80.1 million.
Cash Position
As of Dec 31, 2019, Wynn Resorts’ cash, cash equivalents and restricted cash totaled $2.36 billion. Outstanding debt at the end of the second quarter amounted to $10.4 billion, including $3.11 billion of Wynn Las Vegas related debt, $4.96 billion of Macau debt, $1.72 billion of Wynn Resorts Finance debt, and $611.7 million of debt held by the retail joint venture, which the company consolidated.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -138.84% due to these changes.
VGM Scores
Currently, Wynn has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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.
Wynn Resorts, Limited (WYNN): Free Stock Analysis Report
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