Wynn (WYNN) Up 19.8% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Wynn Resorts (WYNN). Shares have added about 19.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wynn due for a pullback? 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 drivers.

Wynn Resorts Q1 Earnings & Revenues Miss Estimates

Wynn Resorts reported first-quarter 2020 results, wherein both earnings and revenues missed the Zacks Consensus Estimate for the third straight quarter. Following the results, the company’s shares declined 2.8% in after-hour trading session on May 6.

The company reported an adjusted loss of $3.54 per share, wider than the Zacks Consensus Estimate of a loss of $1.05. In the prior-year quarter, the company had reported adjusted earnings per share of $1.61. In the reported quarter, the bottom line was hurt by operating loss at Encore Boston Harbor, Wynn Palace, Wynn Macau, Las Vegas operations and Encore Boston Harbor. During the coronavirus-induced shutdowns in Macau, the company was bearing expenses between $2.2 million and $2.6 million per day.

Following the reopening of Macau casinos, the company witnessed gradual increase in gaming volume from Feb 20 to Mar 20, and expenses declined from $2.5 million per day to $800,000 a day.

Revenues totaled $953.7 million, which lagged the Zacks Consensus Estimate of $1,093 million. The top line also declined 42.3% thanks to dismal performances by Wynn Palace, Wynn Macau and Las Vegas operations. The company’s operations were impacted by the coronavirus pandemic.

In an effort to maintain sufficient liquidity amid the ongoing crisis, the company has suspended quarterly dividend.

Wynn Palace Disappoints

Revenues from Wynn Palace totaled $259.5 million in the first quarter, down 64.3% year over year. Casino revenues amounted to $207.6 million, down 66.7%. Rooms, food and beverage, and entertainment, retail and other also declined 54.5%, 53.5%, 39.9%, to $19.7 million, $13.3 million and $18.9 million, respectively.

At the VIP segment, table games turnover was $4.8 billion, down 62% year over year. VIP table games win rate (based on turnover) was 2.9%, within the expected range of 2.7-3% but below 3.91% witnessed in the year-ago quarter. Table drop at the mass market segment was $475.2 million, down 63.6% from the year-ago quarter. Furthermore, table games win in mass market operations amounted to $130.7 million, down 58.6% year over year.

Notably, average daily rate (ADR) came in at $294 (up8.4%), occupancy was 41.6% (97.2% reported in the prior-year quarter) and revenue per available room (RevPAR) was $122 (down 53.8%).

Wynn Macau Operations

Wynn Macau revenues were down 56.2% year over year to $229.5 million in the first quarter on account of decrease in casino, rooms, food and beverage, and entertainment, retail and other revenues.

Notably, casino revenues in the reported quarter fell 57.8% to $190.1 million. Rooms, food and beverage, and entertainment, retail and other revenues declined 44.9%, 54.6% and 41.5%, to $15.9 million, $9.5 and $13.9 million, respectively.

Table games turnover at the VIP segment declined 70.9% to $2.9 billion. Meanwhile, the VIP table games win rate (based on turnover) was 4.14%, higher than the year-ago quarter figure of 2.9%.

Table drop at the mass market segment was $578.2 million, down 57.2% year over year. Table games win in the mass market category amounted to $117.9 million, down 55.4%.

Notably, average daily rate (ADR) came in at $321 (up 10.9%), occupancy was 49.2% (compared with 99.3% in the prior-year quarter) and revenue per available room (RevPAR) was $258 (down 45.1%).

Las Vegas Operations

Revenues from Las Vegas operations were down 19.3% year over year to $323.8 million in the quarter under review. The downside can primarily be attributed to the coronavirus-induced shutdowns.

Casino and food and beverage revenues declined 36.2% and 14.3% to $71.3 million and $106 million, respectively. Rooms and entertainment, retail and other revenues also decreased 10.9% and 13.3% to $106.1 million and $40.4 million, respectively.

Further, table games drop increased 2.7% to $414.9 million. Meanwhile, table games win witnessed a sharp decline of 25.8% year over year to $82.7 million. Table games win percentage of 19.9% was down from 27.6% in the year-ago quarter and also below the projected range of 22-26%.

During the quarter, RevPAR improved 7.2% to $299. Occupancy rate was 80.1%, down 250 basis points from the prior-year period. ADR came in at $374, up 10.7%, year over year.

Encore Boston Harbor

The company, which opened Encore Boston Harbor on Jun 23, 2019, reported revenues of $140.9 million. Table games win was 20.8%, abovecompany’s expected range of 16-20%.

Operating Performance

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) came in at negative $5.3 million. In the prior-year quarter, the company had reported adjusted property EBITDA of $494.8 million.

In the quarter under review, adjusted property EBITDA from Macau totaled $29.4 million, compared with $386.5 million reported in the prior-year quarter. Adjusted property EBITDA from Las Vegas operations came in at negative $22.1 million, compared with adjusted EBITDA of $108.3 million.

Cash Position

As of Mar 31, 2020, Wynn Resorts’ cash, cash equivalents and restricted cash totaled $2.89 billion.

Outstanding debt at the end of the first quarter amounted to $11.37 billion, including $3.11 billion of Wynn Las Vegas related debt, $5.15 billion of Macau debt, $2.5 billion of Wynn Resorts Finance debt, and $611.9 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 fresh estimates. The consensus estimate has shifted -315.7% due to these changes.

VGM Scores

At this time, Wynn has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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. Notably, Wynn has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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