Wynn Resorts (WYNN) Stock Up Despite Earnings Miss in Q4

Shares of Wynn Resorts Ltd. WYNN increased nearly 7% in after-hours trading on Jan 26, after the company reported mixed fourth-quarter 2016 results. Earnings lagged the Zacks Consensus Estimate, while revenues topped the same.

Earnings and Revenue Discussion

Adjusted earnings of 50 cents per share missed the Zacks Consensus Estimate of 67 cents by 25.4%. Further, earnings decreased 35% from the year-ago figure of $1.03 mainly due to lower operating income margin.
 

Adjusted earnings exclude pre-opening cost, a change in interest rate swap fair value, decrease in redemption note fair value, property charges as well as income tax and non-controlling interest impact.

Wynn Resorts’ revenues of $1.30 billion surpassed the Zacks Consensus Estimate of $1.25 billion by 4%. Moreover, revenues increased 37.3% on the back of Wynn Palace opening, partly offset by lower revenues from Wynn Macau and unfavorable performance by the company’s Las Vegas Operations.

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 18.6% to $340.9 million year over year. The surge was on the back of higher revenues from Wynn Palace.

Meanwhile, total operating costs and expenses increased 46.1% to $1.16 billion primarily owing to a rise in casino, rooms, food and beverage, entertainment, retail and other, property charges, and general and administrative expenses.

Macau Operations

Wynn Macau

Wynn Resorts reports its Wynn Macau table games’ results under two segments – VIP and mass market.

Wynn Macau revenues decreased 10.3% year over year to $498.4 million in the quarter, owing to lower casino revenues. Notably, casino revenues from Macau operations declined 10.7% to $465.3 million.

Meanwhile, table games turnover in the VIP segment plunged 17.2% to $10.8 billion due to a sluggish Macau VIP market. The VIP table games win rate (based on turnover) was 3.08%, up 48 basis points (bps) and above the projected range of 2.7% to 3%.

Table drop in the mass market segment was $1.1 billion, down 7.5%. Table games win in the mass market category amounted to $193.9 million, down 15.2%. Moreover, mass market win rate was 17.7%, down 160 bps.

Non-casino revenues before promotional allowances tanked 14.6% to $64.6 million. Meanwhile, room revenues decreased 16.9% to $25.9 million. Revenue per available room (RevPAR) plunged 19% in the quarter to $252 million due to an 18.9% decline in average daily rate (ADR), while Occupancy rate remained flat.

In the quarter, adjusted property EBITDA was $148.9 million, down 7% due to weakness in the gaming segment.

Wynn Palace

On Aug 22, 2016, Wynn Resorts’ Chairman of the Board and Chief Executive Officer, Steve Wynn, unveiled the Wynn Palace resort in the Cotai area of Macau. Thus, the fourth quarter of 2016 represents the first full quarter of operations for this resort.

Wynn Resorts’ revenues from Wynn Palace were $418.7 million in the quarter, while casino revenues totaled to $373.2 million.

Meanwhile, table games turnover in the VIP segment was nearly $10.3 billion and VIP table games win rate (based on turnover) was 2.68%, below the expected range of 2.7–3%.

Table drop in the mass market segment was $725 million and table games win amounted to $159.6 million. Meanwhile, mass market win rate was 22%.

Total non-casino revenues, before promotional allowances were $86.1 million. During the quarter, room revenues were $40.6 million with an ADR of $272 million, occupancy of 88.4% and REVPAR of $241 million. In the quarter, adjusted property EBITDA stood at $77.5 million.

Las Vegas Operations

Wynn Resorts’ revenues from Las Vegas operations were down 2% to $383.3 million due to lower casino and non-casino revenues. Notably, casino revenues from Las Vegas operations declined 2.8% to $166 million. Meanwhile, table games win percentage was 27.5%, down 120 bps, but above management’s guidance range of 21–25%.

Total non-casino revenues, before promotional allowances, decreased 1.1% to $260.2 million year over year. Room revenues were up 3.8% to $105.7 million. During the quarter, RevPAR grew 3.4% to $245 million on the back of a 300 bps increase in occupancy rate, partly offset by a 0.3% decline in ADR. In the quarter, adjusted property EBITDA was down 10% to $114.6 million.

Wynn Resorts, Limited Price, Consensus and EPS Surprise

 

Wynn Resorts, Limited Price, Consensus and EPS Surprise | Wynn Resorts, Limited Quote

2016 Results

Earnings for 2016 were $3.39 per share, missing the Zacks Consensus Estimate of $3.69 per share by 8.1%. Further, earnings decreased 1.5% year over year.

For 2016, net revenue was $4.47 billion, up 9.6% from 2015. Revenues also surpassed the Zacks Consensus Estimate of $4.42 billion by 1.1%.

Zacks Rank & Stocks to Consider

Wynn Resorts presently has a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include:

Melco Crown Entertainment Ltd. MPEL sporting a Zacks Rank #1 (Strong Buy). Melco’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 102.92%. You can see the complete list of today’s Zacks #1 Rank stocks here.

MGM Resorts International MGM holds a Zacks Rank #2 (Buy). For 2016, the company’s EPS is expected to grow 113.3%, while the industry’s average stands at 12.6%.

Las Vegas Sands Corp. LVS also carries a Zacks Rank #2. The Zacks Consensus Estimate for the company’s full-year 2016 earnings climbed nearly 2% over the last 30 days.

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