Wynn Soars on Strong Q4 Results, CEO Sees Opportunity in Wynn West Plan

Posted on: February 8, 2024, 12:05h. 

Last updated on: February 8, 2024, 12:14h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Wynn Resorts (NASDAQ: WYNN) surged Thursday after the casino operator delivered estimate-topping fourth-quarter results late in the day.

Wynn Civic 50
Wynn Las Vegas. The operator notched strong Q4 results and is looking to expand in Las Vegas. (Image: YouTube)

Buoyed by strength in its Wynn Macau division, the Las Vegas-based gaming company posted earnings per share (EPS) on non-generally accepted accounting principles (GAAP) in the December quarter of $1.91 on revenue of $1.84 billion. Analysts expected EPS of $1.16 on sales of $1.74 billion. Sturdiness in both Macau and Las Vegas in the final three months of 2023 has analysts optimistic regarding Wynn’s ability to capitalize on marquee near-term catalysts, including this Sunday’s Super Bowl in Las Vegas and the Chinese New Year. Plus, there’s room to run in the Macau resurgence.

Based on the fact that we believe China is still at least a year behind the U.S. in terms of a recovery, we don’t see a reason why Macau demand should slow anytime soon, even if there is a slight contraction on the China macro front,” wrote Stifel analyst Steven Wieczynski in a note to clients.

Wieczynski reiterated a “buy” rating on Wynn while lifting his price target on the stock to $135 from $133. The new projection implies upside of 27% from current levels.

Wynn Wants to Make Use of Excess Las Vegas Land

From an investment perspective, Wynn is typically framed as a Macau story, and with the casino gaming industry there rebounding in impressive fashion, analysts and investors are impressed, but the operator’s domestic venues are also contributing to the bullish thesis.

On a conference call with analysts, Wynn COO Brian Gullbrants said that in Las Vegas, the “outlook for group business is super strong. ’24 is pacing towards a record room night.” That after the operator was one of the biggest winners of the Las Vegas Grand Prix last November, a status that’s expected to carry over into Super Bowl weekend.

While Wynn is a Macau-centric investment story, the operator is evaluating ways to potentially add to its footprint in Las Vegas. Those efforts could include making use of its Sin City land bank and perhaps adding a third tower to join Wynn and Encore. Recent reports suggest that the “Wynn West” concept could encounter some regulatory headwinds in Nevada, but CEO Craig Billings said the operator plans to put its Las Vegas real estate to use.

“We will certainly make use of that land across the street in Las Vegas. It’s not a question of if, it’s a question of when, and we’ll see how things play out in New York and things play out in a couple of other jurisdictions in determining the timing of the use of that land,” he said in response to a question from Wells Fargo analyst Daniel Politzer.

Wynn Shareholder Reward Plans

Shareholder rewards were also a topic of discussion on the conference call. Wynn restated its quarterly dividend last May, but that hasn’t carried over to Wynn Macau. It’s expected the Macau unit’s payout will be restored, but that could be a 2025 or later story.

As you know, the dividend just as a global statement, dividends are the cornerstone of our capital return strategy,” said Billings of the possibility of boosting the payout. “So stay tuned. We are looking very closely at it, and we’ll figure it out in due course.”

During the fourth quarter, Wynn repurchased $139 million worth of its shares, more than double the $59 million it bought back in the prior quarter. At the end of 2023, the gaming company had $1.32 billion in cash on hand and $11.74 billion in debt.