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Why Is Wynn (WYNN) Up 19.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Wynn Resorts (WYNN). Shares have added about 19.4% 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 catalysts.

Wynn Resorts Q1 Earnings & Revenues Miss Estimates

Wynn Resorts reported first-quarter 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. Nevertheless, the metrics increased on a year-over-year basis.

Q1 Earnings & Revenues

The company reported an adjusted loss of $1.21 per share, wider than the Zacks Consensus Estimate of a loss of $1.15. In the prior-year quarter, the company reported an adjusted loss of $2.41 per share.

Revenues during the fourth quarter came in at $953.3 million, missing the Zacks Consensus Estimate of $1,001 million by 4.8%. In the prior-year quarter, the company delivered revenues of $736.7 million. The company benefitted from the solid contributions of Las Vegas and Encore Boston Harbor operations.

Wynn Palace Operations

During the first quarter, Wynn Palace revenues were $163.3 million compared with $237.3 million reported in the prior-year quarter. Casino revenues in the reported quarter totaled $114.4 million compared with $185.9 million reported in the prior-year quarter. Rooms and food and beverage revenues declined 18.7% and 2% year over year to $13.8 million and $11.4 million, respectively. During the quarter under review, entertainment, retail and other revenues increased 4% year over year to $23.6 million.

In the VIP segment, table games turnover was $965.6 million, down 56.1% year over year. VIP table games win rate (based on turnover) was 2.05%, lower than the expected range of 3.1-3.4%. The figure was below 4.38% reported in the prior-year quarter. Table drop at the mass market segment was $531.9 million compared with $607.5 million reported in the prior-year quarter. Table games win in mass market operations amounted to $111.2 million compared with $131.6 million reported in the prior-year quarter.

During the reported quarter, RevPAR declined 21.3% year over year to $85. Occupancy levels in the segment came in at 47.2% compared with 60.4% reported in the prior-year quarter. The average daily rate (ADR) during the quarter came in at $180, up 1.1% on a year-over-year basis.

Wynn Macau Operations

During the first quarter, Wynn Macau’s revenues amounted to $135.1 million compared with $179.7 million reported in the prior-year quarter. The downside was primarily due to a fall in casino, rooms, and entertainment, retail and other revenues.

Casino revenues in the reported quarter were $102.4 million, down 26.3% year over year. Rooms and entertainment, retail and other revenues declined 36.1% and 19.9% year over year to $9.4 million and $14.9 million, respectively. During the quarter, food and beverage revenues increased 12.8% year over year to $8.4 million.

Table games turnover in the VIP segment declined 50.8% year over year to $887.1 million. The VIP table games win rate (based on turnover) was 3.84%, falling above the expected range of 3.1-3.4%. The figure was above 3.25% reported in the prior-year quarter.

Table drop in the mass market segment was $469.1 million compared with $590.9 million reported in the prior-year quarter. Table games win in the mass market category was $82.3 million compared with $105.2 million reported in the prior-year quarter.

During the reported quarter, RevPAR fell 36.1% year over year to $94. Occupancy levels in the segment came in at 49.8% compared with 60.8% in the prior-year quarter. However, ADR came in at $188, down 22.3% year over year.

Las Vegas Operations

During the first quarter, revenues from Las Vegas operations were $441.2 million compared with $178.7 million reported in the year-ago quarter.

Casino revenues surged 55.5% year over year to $124.3 million. Revenues from food and beverage, rooms and entertainment, retail and other increased 239.4%, 230.6% and 160.4% year over year to $136 million, $131.5 million and $49.4 million, respectively.

Table games drop increased 68.8% year over year to $547.9 million. Table games win surged 68.5% year over year to $129.2 million. During the first quarter, table games win percentage of 23.6% was within the projected range of 22-26% and in line with the prior-year quarter’s levels.

During the quarter under review, RevPAR soared 184.6% year over year to $333. The occupancy rate came in at 76.9%, up from 35.3% reported in the prior-year quarter. ADR was $432, up 30.5% year over year.

Encore Boston Harbor

During the first quarter, revenues from Encore Boston Harbor operations amounted to $190.8 million compared with $130.1 million reported in the prior-year quarter. During the quarter, table games win percentage of 22.2% was above the projected range of 18-22%. The figure was also higher than 21.1% reported in the prior-year quarter.

During the reported quarter, RevPAR increased 33.2% year over year to $261. The occupancy rate came in at 80.5%, up from 71% reported in the prior-year quarter. ADR was $324, up 17.4% year over year.

Operating Performance

During the first quarter, adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) was $177.6 million compared with $58.9 million reported in the prior-year quarter.

In the quarter under review, adjusted property EBITDA from Macau totaled $(5.5) million against $43.9 million reported in the prior-year quarter. Adjusted property EBITDA from Las Vegas operations was $159.4 million compared with $28.1 million reported in the year-ago quarter. Adjusted property EBITDA from Encore Boston Harbor was $55.3 million compared with $30.4 million reported in the prior-year quarter.

Cash Position

As of Mar 31, 2022, Wynn Resorts’ cash and cash equivalents totaled $2.32 billion compared with $2.52 billion as of Dec 31, 2021.

Total current and outstanding debt at the end of the first quarter amounted to $11.92 billion. The figure included $3.13 billion of Wynn Las Vegas-related debt, $5.97 billion of Macau debt, $2.21 billion of Wynn Resorts Finance debt and $613 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 estimates review.

The consensus estimate has shifted -143.03% due to these changes.

VGM Scores

Currently, Wynn has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 D. 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.

Performance of an Industry Player

Wynn belongs to the Zacks Gaming industry. Another stock from the same industry, Red Rock Resorts (RRR), has gained 10.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Red Rock Resorts reported revenues of $401.64 million in the last reported quarter, representing a year-over-year change of +13.9%. EPS of $0.77 for the same period compares with $0.98 a year ago.

Red Rock Resorts is expected to post earnings of $0.52 per share for the current quarter, representing a year-over-year change of -53.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Red Rock Resorts has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.


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