Is Wynn Resorts a buy?
The COVID-19 recovery is just getting started so let’s check out a recovery play! Here is the breakdown on $WYNN, otherwise known as Wynn Resorts.
Current Price: $115.08
52/Wk High: $153.41
52/Wk Low: $35.84
Market Cap: $12.4 Billion
Read below for the breakdown!
Wynn Resorts is a major operator, owner, and developer of luxury casino resorts around the world. Wynn’s core locations include Macau, Las Vagas, and Boston.
Wynn Resorts is also jumping in on the online sports betting space through their Wynn Interactive segment which recently launched in New Jersey.
Due to the COVID-19 pandemic, 2020 has rocked the stock, and not in a good way. On the flip side of things, investors are now being presented an opportunity given the vaccine rollout and beginning of the pandemic and economic recovery.
Breaking down Wynn Resorts stock price according to TREIFS (@trefis) data 63.20% of the stock price is based on the company’s Macau segment.
Furthermore, 24.31% of the stock price is based on the company’s Las Vagas segment, while 12.49% is based on their Boston segment.
Digging into the numbers Wynn Resorts missed Q3 expectations. Wynn missed EPS expectations of $-4.03, reporting an EPS of $-7.04. Furthermore, revenues declined as well.
Wynn Resorts reported Q3 operating revenues of $370.5 million, representing a huge decline of 77.5% year over year. In short, operating revenues declined $1.28 billion from the $1.65 billion reported in Q3 2019.
Not only did Wynn Resorts report a massive revenue decline but the company reported a net loss of $758.1 million throughout the third quarter.
Wynn Resorts went on to report their adjusted property EBITDA landed at a low $-65.9 million for Q3, much lower than the 2019 same time level of $396.9 million.
Management was upbeat about the quarter, noting that COVID-19 did take a toll on the company but has a bright future.
“We are encouraged by the progress we have made in each of our properties over the past several months, despite the ongoing impact of the virus and related operating limitations,” CEO Matt Maddox said.
Shifting into the balance sheet the numbers needs to see improvement.
Total Debt: $12.790 Billion
Total Liabilities: $14.096 Billion
Total Assets: $13.967 Billion
Cash & Short Term Inv: $3.555 Billion
Given the pandemic and major hit the stock has taken $WYNN is not badly priced and currently sits at a price to sales ratio of 4.06x.
Taking a look at management the pandemic has challenged the company.
Return on Equity: -209.01%
Return on Assets: -14.93%
Return on Invested Capital: -16.74%
Given the numbers, the analysts remain mostly bearish with the mean price target sitting at $101.60/share, representing a -11.62% decline.
It is also important to note that the high price target is $120.00/share, representing a 4.38% upside, while the low price target is $80.00/share, representing a -30.41% loss.
The big money is also quite involved with 68.89% of Wynn Resorts being owned by institutions. Top holders include T. Rowe Price Associates, The Vanguard Group, and BlackRock Institutional Trust.
On a technical basis, $WYNN has been relatively bullish in recent weeks. According to the six-month charts, the MACD is currently running sideways within a tight range around 6.87.
The six-month charts are also indicating an RSI of 67.81 and CCI of 103.74, both of which are on the high end. Wynn Resorts also trades quite a ways from its highs.
In short Wynn Resorts could be a solid long-term investment throughout the COVID-19 recovery. On the flip side, the balance sheet needs improvement, management needs to perform much better, and the COVID-19 timeline is still mostly undetermined.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.