Shares of Wynn Resorts rose 2% in after-hours trading on Tuesday after the casino operator reported stronger-than-expected quarterly results driven by the Super Bowl in Las Vegas and the recovery in China’s Macau region. We’re surprised the stock hasn’t risen further. LSEG estimates operating income rose 31% year-over-year to $1.86 billion, beating expectations of $1.79 billion. Adjusted earnings per share (EPS) got here in at $1.59 per share, well above the LSEG consensus estimate of $1.27. According to FactSet, adjusted real estate EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or lease costs) — Wynn’s key measure of profitability — rose 50% year-over-year to $647 million, above the consensus estimate of 603 million US dollars. Wynn Resorts Why we own it: We bought this casino operator due to its well-run resorts in Las Vegas, Boston and particularly in China’s Macau region – where we expect further upside because the world’s second-largest economy continues to get better from the crisis recovers from pandemic lockdowns. The company generated more profit in 2023 than in 2019, and yet the stock is trading well below its pre-Covid level. Competitors: Las Vegas Sands, MGM Resorts International, DraftKings Last Purchased: February 20, 2024 Started: April 2021 Conclusion The market has been concerned about all things discretionary spending after several consumer firms issued lukewarm guidance this earnings season. But the Vegas numbers in Tuesday’s results show that Wynn’s premium resorts — and the standard services they provide — have a level of pricing power that’s underappreciated. As for Macau, which is anticipated to generate just over half of its adjusted EBITDAR this yr, concerns in regards to the Chinese consumer proceed to weigh heavily on the stock, stopping it from returning to the degrees it was trading at pre-Covid. And yet Wynn continues to post results that show recovery almost to the finish line. Although people in China could also be spending less on goods, a 99% hotel occupancy rate at Wynn’s properties paints a really different picture. It shows a willingness to travel despite economic headwinds domestically. And that revenue generates a better margin today than it did five years ago. The stock has fallen into the $90s to $106 from the beginning following the newest quarterly report – although we have seen a lot of pullbacks on each property and heard an optimistic view for April. These were great results from Wynn. We reiterate our rating of 1 and our price goal of $125. Quarterly Results Here’s a more in-depth have a look at the performance of every operating region and segment within the fourth quarter, starting with Macau. Macau It was a double whammy in Macau as each hotels (Wynn Palace and Wynn Macao) reported sales and profit results above Street expectations. We felt Macau was prepared for a blow after testing the recent Las Vegas Sands district, which has seen weakness in the world as a consequence of planned renovations. Those visitors had to remain elsewhere, leading to Wynn gaining market share, with a collective adjusted EBITDAR of $340 million in gross gaming revenue, a market share the corporate said was above the previous quarter and its 2019 rates . By the best way, that $340 million in Adjusted EBITDAR represents about 88% of what the corporate generated in 2019, a slight improvement over the 85% Wynn generated within the fourth quarter of 2023 in comparison with the identical period in 2019. Although recovery stays elusive, Wynn’s disciplined operating costs and a positive mix shift toward higher-margin mass gaming customers are driving higher margins. For the quarter, Macao’s EBITDA margin was around 34%, up 140 basis points from Q4 2023 and a whopping 310 basis points from Q1 2019. Guidance: In further excellent news, management pointed to the strength of the primary quarter, which lasted through April . Bulk deposits per day – the amount of cash Wynn collected from drop boxes at its gaming tables – increased 30% in April in comparison with 2019 numbers. On the non-gaming side, hotel occupancy was 99%. The company also said it was pleased with the outcomes of May’s Golden Week despite the unfavorable weather. The holiday season ran from May 1 to May 5, and management said each day bulk waste was up 30% in comparison with the identical period in 2019. Las Vegas Las Vegas posted a record real estate adjusted EBITDAR in the primary quarter. February was the strongest month of the quarter, primarily since the Super Bowl was played in Las Vegas for the primary time. A robust Chinese New Year also contributed to the outcomes. Although the corporate’s casino revenue fell greater than 12% year-over-year, the corporate saw tremendous strength within the non-gaming space with a 21% increase in hotel revenue. Guidance: Management said its April revenue trends were healthy as declines, bookings and revenue per available room (RevPAR) increased year-over-year despite difficult comparisons. Encore Boston Harbor Wynn’s Boston property was relatively stable, with flat sales and adjusted EBITDAR, despite January’s poor weather and inflationary pressures. Forecast: For the present quarter, management said demand “remained healthy” through April. However, the corporate is putting development on the property on hold as a consequence of its failure to achieve agreement on financial terms with local authorities. The company plans to redirect this capital to other development projects it’s working on, resembling its project within the United Arab Emirates. (Jim Cramer’s Charitable Trust is long WYNN. A full list of stocks might be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
The Wynn Las Vegas Resort and Casino at dusk in Las Vegas, Nevada, USA, on Monday, May 8, 2023. Wynn Resorts Ltd. is anticipated to release its earnings results on May tenth.
Bridgett Bennett | Bloomberg | Getty Images
Shares of Wynn Resorts rose 2% in after-hours trading on Tuesday after the casino operator reported stronger-than-expected quarterly results driven by the Super Bowl in Las Vegas and the recovery in China’s Macau region.
We’re surprised the stock hasn’t risen further.
