Wynn Resorts, Limited (WYNN) is expected to experience positive growth thanks to strong performance in Macau, non-gaming ventures, and ongoing development projects. Additionally, a commitment to enhancing shareholder value supports this outlook. However, rising operational costs pose some challenges.
Here’s a closer look at the reasons for holding onto WYNN stock.
Reasons for Optimism in WYNN Stock
Wynn Resorts has seen robust growth from its Macau operations. In the third quarter, they reported $263 million in EBITDA from this region, reflecting a 3% year-over-year increase. Operating revenues grew by 6%, boosted by a 10% rise in combined mass table and slot winnings. In October, the company noted strong mass table drops and a near-full hotel occupancy rate of 99%. This surge was particularly evident during the Golden Week holiday, which saw mass table drops climb nearly 30% compared to the previous year.
To attract more customers, WYNN is enhancing its food and beverage options in Macau. This includes four newly revamped venues at Wynn Palace, the recent opening of Drunken Fish at Wynn Macau, and the upcoming launch of a destination food hall at Wynn Palace in mid-2025. In addition, Wynn is refreshing the exclusive Chairman’s Club at Wynn Macau and exploring a similar upgrade at Wynn Palace. These initiatives, paired with an improved loyalty program and unique events under the “Only at Wynn” brand, are expected to drive further growth.
Las Vegas operations also reported solid demand in the third quarter, with normalized revenues increasing by about 1% year over year. Hotel revenues rose by 5%, while slot handle and table games demand also remained strong. Wynn Las Vegas benefits from a stable high-end consumer market and plans to leverage its luxury status as it moves into 2025.
The Wynn Al Marjan Island project in the UAE is poised to be transformative for the company. As the region’s first land-based gaming license holder, Wynn aims to capture a share of an estimated $3 billion to $5 billion gaming market. With construction progressing quickly, this development is expected to yield a high return on investment and secure Wynn’s position in this promising market.
Wynn’s commitment to shareholder value is evident as well. The company increased its share repurchase authorization to $1 billion, showcasing management’s confidence in the company’s valuation. Wynn also announced a cash dividend of 25 cents per share and cut gross debt by $1.2 billion year over year, resulting in $70 million in annual interest savings. These actions not only strengthen Wynns’ financial standing but also affirm its intention to return capital to shareholders.
Potential Risks for WYNN Stock
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In the last year, Wynn Resorts’ shares rose by 5%, a stark contrast to the industry average of 27.2%. This lag can be attributed to a challenging overall economic environment.
One concern for the company is rising operational expenses. In the third quarter, Wynn reported increases in casino and room costs, alongside higher general and administrative expenses. Casino expenses reached $617.5 million, up from $577.7 million in the same quarter last year. General and administrative costs rose to $271.8 million, compared to $268.4 million during the prior-year quarter. Additionally, the company is wary of the potential impact of fluctuating interest rates moving forward.
WYNN’s Zacks Rank & Recommended Stocks
Wynn Resorts currently holds a Zacks Rank #3 (Hold).
Investors might also consider these well-ranked stocks in the Zacks Consumer Discretionary sector:
Carnival Corporation & plc (CCL) holds a Zacks Rank #1 (Strong Buy). The stock has recorded a remarkable earnings surprise of 318.1% over the last four quarters, and it has surged 76.5% in the past year. The Zacks Consensus Estimate for CCL’s fiscal 2024 sales predicts a 16.6% increase compared to last year.
Norwegian Cruise Line Holdings Ltd. (NCLH) has a Zacks Rank #2 (Buy), with a trailing earnings surprise of 4.2%. The stock soared 81.3% in the past year. The consensus estimates for NCLH’s 2024 sales and EPS reflect projected growth of 10.2% and 127.1%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL) also carries a Zacks Rank #2. The company boasts a trailing earnings surprise of 16.2% and has gained 125% in the last year. The Zacks Consensus Estimate for RCL’s 2024 sales and EPS suggests growth of 18.6% and 71.6%, respectively, from the previous year.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
