Wynn Resorts (WYNN) Stock Falls Despite Q1 Earnings Beat
Wynn Resorts WYNN posted impressive results for first-quarter 2018, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings of $2.30 per share outpaced the Zacks Consensus Estimate of $1.96 by 19.4%. The bottom line also increased 79.7% on a year-over-year basis. This improvement can be attributed to substantial rise in operating income from Macau operations (Wynn Palace and Wynn Macau) and income tax benefit from U.S. tax reform, partially offset by a decrease in Redemption Note fair value.
Wynn Resorts’ revenues of $1.72 billion exceeded the Zacks Consensus Estimate of $1.71 billion by 0.4%. The top line also improved 20.5%, given significant contribution from Wynn Palace, Wynn Macau and Las Vegas operations.
Concurrent with the earnings announcement, the company raised its quarterly cash dividend by 50% to 75 cents per share. The dividend will be payable May 29, 2018 to shareholders of record as of May 17.
Despite reporting better-than-expected quarterly results, the company’s shares decreased 2.9% in after-hours trading yesterday. The decline was primarily due dismal GAAP results. On a GAAP basis, Wynn Resorts incurred loss per share of $1.99 against income of 99 cents in the prior-year quarter due to litigation settlement expenses of $463.6 million and $69.3 million rise in the Redemption Note fair value.
However, in the past six months, the stock has surged 30.8% compared with the industry’s increase of 12.4%.
Wynn Macau Revenues Increase Y/Y
Wynn Macau revenues were up 11.9% year over year to $618.2 million in the quarter, courtesy of higher casino and non-casino revenues.
Notably, casino revenues increased 10.5% to $539 million. Table games turnover in the VIP segment surged 28.6% to $17.09 billion. However, the VIP table games win rate (based on turnover) was 2.61%, down 69 basis points (bps) year over year, and below the projected range of 2.7-3%.
Table drop in the mass market segment was $1.32 billion, up 16.4% year over year. Also, table games win in the mass market category amounted to $256.5 million, up 20.5%. Meanwhile, table games win percentage in mass market operations rose 19.4%, up 70 bps from the year-ago quarter.
Non-casino revenues improved 22.3% to $79.2 million. Room revenues were up 19% year over year at $28.4 million. Revenue per available room (RevPAR) also increased 21.5% in the quarter to $288 million. While, average daily rate (ADR) rose 17.8%, occupancy rate increased 330 bps to 99%.
Wynn Resorts, Limited Price, Consensus and EPS Surprise
Wynn Palace Continues to Impress
Revenues from Wynn Palace were $665.8 million in the quarter, up a massive 47.2% year over year. Casino revenues totaled $568.5 million, up 50.7%. Also, table games turnover in the VIP segment was $15.39 billion, up 39.3%. VIP table games win rate (based on turnover) was 2.60% lower than the expected range of 2.7-3% and down 43 bps year over year. Table drop in the mass market segment was $1.22 billion, surging 58.1% from the year-ago quarter. While table games win in mass market operations amounted to $310.2 million, up 85%, mass market win rate increased 370 bps to 25.5%.
Non-casino revenues were $97.4 million, up 29.5% from the year-ago quarter. Also, room revenues were $40.4 million, up 37.9% from the year-ago figure. Notably, ADR came in at $252 million (up 30.6%), occupancy was 96.8% (up 120 bps) and RevPAR was $244 million (surged 31.9%).
Las Vegas Operations Returns to Growth
Revenues from Las Vegas operations increased 3% year over year to $431.5 million in the quarter. The upside can be attributed to rise in both casino and non-casino revenues.
Casino revenues rose 8% to $134.6 million. Table games drop and table games win surged 17% and 18%, respectively. Table games win percentage of 28.8% increased 30 bps from the year-ago quarter and was above the expected range of 22-26%.
Total non-casino revenues also inched up 0.2% year over year to $296.8 million. Room revenues were up 5% to $121.5 million. During the quarter, RevPAR grew 5.2% to $285 million on the back of a 7.6% increase in ADR. Occupancy rate was 83.9% compared with 85.5% in the year-ago quarter.
While, food and beverage revenues increased 2% to $125.8 million, entertainment, retail and other revenues were down 6.3% to $49.6 million.
Solid Operating Performance at Wynn Macau & Wynn Palace
Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 32% year over year to $564.3 million driven by increases at Wynn Macau, Wynn Palace and Las Vegas.
In the quarter, adjusted property EBITDA from Wynn Macau was $209.8 million, up 15.9% year over year, while the same from Wynn Palace surged 89.4% to $211.9 million. Adjusted property EBITDA from Las Vegas operations was up 6% to $142.6 million.
As of Mar 31, 2018, Wynn Resorts’ cash and cash equivalents, restricted cash and investment securities were $2.16 billion.
Outstanding debt at the end of the quarter totaled $9.36 billion, including $3.10 billion of Wynn Las Vegas related debt, $4.23 billion of Macau debt and $2.03 billion at the parent company and other.
Wynn Resorts has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Domino’s DPZ has an Earnings ESP of +0.20% and a Zacks Rank #3. The company is scheduled to report first-quarter results on Apr 26, before market open.
Wingstop WING has an Earnings ESP of +3.80% and a Zacks Rank #3. The company is slated to release first-quarter results on May 3, after market close.
Wendy’s WEN has an Earnings ESP of +2.72% and a Zacks Rank #3. The company is scheduled to report first-quarter results on May 8, after market close.
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