Wynn Resorts Ltd.
) fourth quarter 2012 adjusted earnings of $1.17 per share fell
short of the Zacks Consensus Estimate of $1.26 as well as
prior-year earnings of $1.55 per share.
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On a reported basis, earnings per share were $1.10 versus $1.52
in the comparable quarter last year. A poor VIP business in Macau
was responsible for the downturn in earnings.
Net revenue declined 4.1% year over year to $1,289.1 million but
beat the Zacks Consensus Estimate of $1,277 million.
Full year 2012 adjusted earnings of $5.36 fell short of the Zacks
Consensus Estimate of $5.44 per share as well as the prior-year
earnings of $5.58 per share . Net revenue slid 2.2% to $5,154.3
million, which missed the Zacks Consensus Estimate of $5,158
Net revenue at Wynn Macau was $898.7 million in the quarter, down
9.7% year over year, due to a decline in VIP table games.
Performance at Macau was mainly hit by fierce competition and the
company's increased exposure to the sluggish VIP segment.
The table games turnover in the VIP segment declined 6.6% from
the prior-year period to $27.7 billion. Though, VIP table games
win as a percentage of turnover was 2.96% and within the expected
range of 2.7-3.0%, it was lower than the year-ago level of 3.18%.
However, table games in the mass market category nudged up 1.0%
to $699.3 million. Moreover, the mass market table games win rate
was 31.1%, higher than the year-earlier rate of 30.4%.
Average daily rate at Wynn Macau was $314, down 2.6% year over
year. However, the property's occupancy level was 96.5%, up from
94.2% in the prior-year quarter. Combining both the effects,
revenue per available room (RevPAR) slipped 0.3% year over year
Wynn Resorts is building a full scale integrated resort on the
Cotai land at Macau and at present expects the project to cost
around $3.5--$4.0 billion.
Las Vegas Operations
Wynn Resorts' revenues from Las Vegas operations witnessed an
upside of 12.1% year over year to $390.4 million as net casino
revenues surged 23.8% from the prior-year period to $180.5
million. However, gross non-casino revenues increased 4.6% year
over year to $258.0 million, buoyed by improved revenues from the
hotel, and food and beverage segments, offset somewhat by lower
retail and entertainment sales.
During the quarter, average daily rate inched up 1.6% to $254,
but occupancy was almost flat at 79.2%. Both the matrices led to
an increase of 1.8% in RevPAR.
Wynn Resorts doubled its quarterly cash dividend to $1.00 from 50
cents, which will be payable on Feb 28 to stockholders of record
as of Feb 14.
Wynn Resorts is witnessing weak operating results in Macau in
contrast to solid business at Las Vegas for quite some
time. Fierce competition at Macau basically remains an
The company's upcoming project at Cotai will also face extreme
peer pressure from several Chinese casino operators and
Las Vegas Sands Corp.
). Another U.S.-based casino giant
MGM Resorts International
) has recently received land approval to construct a casino at
Recently, Las Vegas Sands also came up with its fourth-quarter
2012 results. While Las Vegas Sands' earnings missed the Zacks
Consensus Estimate, revenue beat the same. In terms of operating
results, Las Vegas Sands' performance in Macau was extremely
solid while its domestic segment underperformed.
However, despite the tough scenario, long-term growth potential
of the Macau market remains solid. Additionally, a boost in
quarterly dividend should encourage investors about Wynn Resorts
Wynn currently retains a Zacks Rank #3 (Hold). However, another
casino operator worth a look includes
Melco Crown Entertainment Limited
) carrying a Zacks Rank #1 (Strong Buy).