Q4 Preview: Wynn (WYNN) May Beat on Macau, But Cotai Remains Investor Focus
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Price: $96.50 -0.58%
Rating Summary:
27 Buy, 15 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
Rating Summary:
27 Buy, 15 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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Wynn Resorts (Nasdaq: WYNN) shares are trading higher Thursday afternoon heading into the casino and resort giant's fourth-quarter earnings report.
Expected out after the market closes, the Street is expecting some big things for Wynn. Earnings should rise 42 percent to $1.29 per share with revenue of $1.36 billion.
The best, most immediate comparison investors should be looking at is peer Las Vegas Sands (NYSE: LVS). After the market close on Wednesday, Sands issued in-line earnings and strong revs. Notably, its Sands China unit saw a 22 percent increase in revs for the quarter with adjusted EBITDA moving 29.2 percent higher.
Shares of Wynn dropped 3.6 percent to $110.49 during the quarter. Wynn has moved 7.3 percent higher since then, and finished-out 2011 about 7.5 percent better. Over the last 52 weeks, Wynn has traded in a range of $101.02 to $172.58.
Macau revenue last quarter totaled 73.517 billion pactas, a 33 percent gain over the same period in 2010. Comparably, Las Vegas saw some gains later in the year, with Strip revs up 13.3 percent in October and about 9 percent in November.
Data from Bloomberg has 14 analyst at a Buy on Wynn, 10 with a Hold, and two maintaining a Sell rating. The Street has an average price target of $143, and individual firm targets ranging from $118 to $188. The range indicates that Wynn is at the bottom, and has no where to go but up.
Analyst Commentary
Expected out after the market closes, the Street is expecting some big things for Wynn. Earnings should rise 42 percent to $1.29 per share with revenue of $1.36 billion.
The best, most immediate comparison investors should be looking at is peer Las Vegas Sands (NYSE: LVS). After the market close on Wednesday, Sands issued in-line earnings and strong revs. Notably, its Sands China unit saw a 22 percent increase in revs for the quarter with adjusted EBITDA moving 29.2 percent higher.
Shares of Wynn dropped 3.6 percent to $110.49 during the quarter. Wynn has moved 7.3 percent higher since then, and finished-out 2011 about 7.5 percent better. Over the last 52 weeks, Wynn has traded in a range of $101.02 to $172.58.
Macau revenue last quarter totaled 73.517 billion pactas, a 33 percent gain over the same period in 2010. Comparably, Las Vegas saw some gains later in the year, with Strip revs up 13.3 percent in October and about 9 percent in November.
Data from Bloomberg has 14 analyst at a Buy on Wynn, 10 with a Hold, and two maintaining a Sell rating. The Street has an average price target of $143, and individual firm targets ranging from $118 to $188. The range indicates that Wynn is at the bottom, and has no where to go but up.
Analyst Commentary
- Goldman Sachs sees earnings of $1.01 for Wynn, saying Wynn was the best gaming operator in the Macau and Las Vegas markets. The drawback? Wynn has no current plans in the pipeline and a recent dispute with its largest shareholder leaves Goldman a little weary.
Adjusted EBITDA should be about $337 million with revs of $1.3 billion. Macau should generate $288 million of EBITDA and Las Vegas should procure $99 million.
During the call, investors should focus on: (1) further clarity on the nature of the allegations and dispute with their largest shareholder, (2) an update on any planned expansion projects, namely their Cotai project and any interest in some of the proposed new US gaming jurisdictions and (3) any insight on the VIP gaming market in Macau, given their relative over exposure and their expectations for 2012."
- Wells Fargo sees EPS of $1.30 and EBITDA of $400.9 million. Macau should generate EBITDA of $299.6 million with VIP volume growth of 6 percent, and revs of $200.7 million.
On Las Vegas, Wells sees EBITDA of $99.7 million. The firm commented "The Nevada Gaming Commission reported 11.2% y/y gaming revenue growth for October and November, with Baccarat revenues up 55% y/y. The Las Vegas Convention and visitors Authority reported 2.9% visitation growth in October and November and 12.9% average Citywide RevPAR growth. Our proprietary Las Vegas room survey is showing 14% leisure rate growth for WYNN in Q4. We are modeling Q4 table win growth of 15% y/y and RevPAR growth of 7.4% y/y."
- J.P. Morgan offered this bit: "Wynn Macau has underperformed the sector over concerns about market share loss (as Galaxy’s new casino opened and VIP market competition intensified) and a market VIP revenue slowdown. At 13x P/E (our earnings are 5% below consensus), we believe that Wynn has priced in a lot of the negatives. While VIP slowdown is a concern, we think investors may have overlooked Wynn's mass franchise (45% of earning) which is still growing strongly (+8% qoq). Near term, investor concerns might continue to drag down the share price, so we believe Wynn is likely to be re-rated in 2H12 after which we expect VIP competition to settle (post Sands Cotai Central opening) and VIP revenue growth to stabilize."
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