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Will Wynn Resorts (WYNN) Disappoint This Earnings Season? - Analyst Blog

Zacks Equity Research
Updated

Wynn Resorts Ltd. WYNN is set to report second quarter 2015 results on Jul 29, after the markets close. Last quarter, the company posted a negative earnings surprise of 48.53%. The company has a four-quarter negative average earnings surprise of 14.16%. Let's see what is in store this quarter.

Factors to Consider

Revenues in Macau, a key operating region for Wynn Resorts, plunged in double digits in all three months of the quarter due to the anti-graft corruption drive taken by the Chinese government. As a result, the VIP business in Macau has been affected considerably.

China's crackdown on illegal money transfers, credit growth issues, and tighter restrictions on visas have posed considerable threats to Macau’s gaming revenues, which have raised concerns for companies like Wynn Resorts. In fact, the latest decline for the month of June marked the 13th consecutive month of decline. Given the current scenario, the soon-to-be reported quarter is expected to be a tough one for the company.

However, these negatives will likely be partially offset by comparatively better performance at the mass market. Also, the company’s properties at Las Vegas would leverage the benefits of an improving employment rate and other positive factors related to tourism in Las Vegas.

Earnings Whispers?

Our proven model does not conclusively show that Wynn Resorts is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The company’s Earnings ESP stands at -5.16%. This is because the Most Accurate estimate is pegged at 92 cents while the Zacks Consensus Estimate stands higher at 97 cents.

Zacks Rank: Wynn Resorts has a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Estimates for both the second quarter and 2015 have declined over the past 30 days.

Stocks to Consider

Here are some companies in the consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Caleres, Inc. CAL with an Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).

Electronic Arts Inc. EA with an Earnings ESP of +22.22% and a Zacks Rank #1.

Guess' Inc. GES with an Earnings ESP of +6.67% and a Zacks Rank #1.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
WYNN RESRTS LTD (WYNN): Free Stock Analysis Report
 
GUESS INC (GES): Free Stock Analysis Report
 
ELECTR ARTS INC (EA): Free Stock Analysis Report
 
CALERES INC (CAL): Free Stock Analysis Report
 
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Zacks Investment Research