Shares of Wynn Resorts, Limited (NASDAQ: WYNN) declined 4.6% in Tuesday’s extended trading session after the sales miss of 7.4% in the second quarter of 2022 upset its stakeholders. The disappointment over sales miss seems to have overshadowed the impact of narrower-than-expected losses reported by the company.
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What Is Wynn Resorts Known For?
Based in Las Vegas, Wynn Resorts owns and operates Wynn Palace, Wynn Las Vegas, Cotai, Encore Boston Harbor, and Wynn Macau casinos resorts and hotels. The company has a market capitalization of $7.6 billion.
What Do Q2 Results Reveal about Wynn Resorts?
Weakness in the casino business, especially due to COVID-19 restrictions in Macau, has been troubling Wynn Resorts for the past couple of quarters. In the second quarter, the company’s casino revenues declined 40.3% year-over-year, while its total revenues were down 8.2% to $908.8 million. The consensus estimate for revenue was $981 million for the quarter.
On a segmental basis, revenues decreased 78.3% year-over-year for the Wynn Palace segment and 68.2% for the Wynn Macau segment. The operations of these two segments comprise Wynn Resorts business in Macau, with revenues declining 74.2% year-over-year in the quarter.
The company’s CEO, Craig Billings, said, “In Macau, while COVID-related travel restrictions continued to impact our results, we remain confident that the market will benefit from the return of visitation over time.”
In contrast to Wynn Palace and Wynn Macau, revenues increased 58% year-over-year for the Las Vega Operations segment, 27.2% for the Encore Boston Harbor segment, and 32.2% for the Wynn Interactive segment.
Total operating expenses in the quarter declined 5.8% year-over-year to $960.9 million. The adjusted property earnings before interest, tax, depreciation, and amortization (EBITDA) were $179.2 million, down 13.4% year-over-year.
In the second quarter, Wynn Resorts reported an adjusted loss of $0.82 per share, narrower than the consensus loss estimate of $1.11 per share. Also, the bottom line was better than the year-ago tally of a $1.12 loss per share.
In addition, the company’s cash position has weakened, with cash and cash equivalents of $2,014.9 million at the end of the second quarter versus $2,522.5 million at the end of 2021.
The cash balance included the impact of $157.5 million in cash outflow for operating activities, $186 million used on capital expenditure, and $25 million utilized for debt repayments. Long-term debt was $11,367.9 million at the end of the quarter. Dividends of $1.3 million were distributed and shares worth $149.3 million were repurchased during the period.
Is WYNN Stock a Good Buy Right Now?
The feeling about Wynn Resorts’ investment appeal is mixed. The stock could be a good opportunity for long-term investors, especially considering the management’s expectations of improvement in Macau operations as and when the COVID-19 impact fades away. The company’s other businesses, including Las Vegas, Encore Boston Harbor, and Wynn Interactive, are already doing well.
Following its second-quarter results, Carlo Santarelli of Deutsche Bank maintained a Buy rating on WYNN, impressed with the long-term opportunities of the company. Santarelli has an $85 (28.73% upside potential) price target on WYNN.
However, for the short-term investors, a wait-and-watch approach, until headwinds related to Macau operations subside, could be a nice idea. Also, financial bloggers are Neutral on WYNN stock.
On TipRanks, analysts are cautiously optimistic about the prospects of Wynn Resorts, which commands a Moderate Buy consensus rating based on three Buys and five Holds. WYNN’s average price target of $78.31 suggests upside potential of 78.31 from the current level.
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