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Is Wynn Resorts Stock Set to Roar with New Investments and Upgrades?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

This week, Wynn Resorts Limited has been in the spotlight due to several key developments that are likely to impact its market behavior. Notably, the announcement of record-breaking earnings and a strategic partnership with a major tech firm has generated significant investor enthusiasm. Consequently, Wynn Resorts Limited’s stocks have been trading up by 5.78 percent on Friday.

Why the Wynn buzz lately? Let me break it down for you. Here’s the scoop:

  • Morgan Stanley recently upgraded Wynn Resorts from Equal Weight to Overweight. They’re eyeing a 25% upside with a new target price of $104. Exciting prospects in the UAE and more stability in Las Vegas are boosting confidence.

Candlestick Chart

Live Update at 10:31:09 EST: On Friday, September 27, 2024 Wynn Resorts Limited stock [NASDAQ: WYNN] is trending up by 5.78%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Wynn Resorts is not holding back, announcing a colossal $800M private offering of 6.25% Senior Notes due 2033. This will help with older notes redemption and general costs, pushing the company into new financial territory.

  • Macquarie has adjusted Wynn’s price forecast, slightly trimming it to $122 from $126, maintaining an ‘Outperform’ rating. Analysts are varied, but the consensus shows a broad target range between $87 and $145, keeping investors on their toes.

  • Wynn Resorts, alongside Related Companies, is set to pour a jaw-dropping $12B into the next phase of Hudson Yards, creating jobs and housing, centered around a new public park, Hudson Green. This bold move aligns with Wynn’s grand vision and continued expansion.

  • Settling a hefty $70M lawsuit related to securities fraud, Wynn Resorts is taking responsibility for $9.4M, with insurance covering the rest. This move is clearing a significant hurdle from its path.

Quick Overview of Wynn Resorts’ Recent Earnings and Key Metrics

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Diving into Wynn Resorts’ latest earnings report, there’s a mixed but insightful narrative. The total revenue clocked in at $6.53B, translating to a revenue per share of $58.85. Impressive growth of 39.64% over three years shows robust top-line expansion, although the five-year perspective is slightly more modest at 2.48%.

On the profitability front, the EBITDA margin stands at 26.5%, showcasing Wynn’s strong operational efficiency. However, the pre-tax profit margin is a sore spot at -11.9%, hinting at significant challenges before taxes. The price to earnings ratio (P/E) of 11.63, combined with a price to sales ratio of 1.42, suggests that despite recent struggles, the stock is attractively valued.

Financial strength indicators paint a cautious picture. The total debt-to-equity ratio may cause some concern, as does the quick ratio of 1.1, which indicates potential liquidity issues. On the plus side, Wynn’s enterprise value stands tall at $20.37B, underscoring its substantial market footprint.

Now, let’s walk through the key financials:

The Latest Numbers: Grit and Determination

Wynn’s quarterly cash flow paints a vivid picture. The company’s operating cash flow hit $352.76M, an indicator of solid core business performance. Free cash flow stood at $257.59M after accounting for outflows like capital expenditures amounting to $93.64M and business purchase outlays of $359.04M. An income inflow via the sale of short-term investments amounted to $350M, though counterbalanced by net debt repayments of $177.19M.

Wynn’s balance sheet showcases total assets worth $13.29B, with long-term debt towering at $11.35B, highlighting a heavy leverage but balanced with $2.37B in cash and equivalents. A key takeaway here is the capital structure involving restricted cash of $2.47B, showing Wynn’s careful liquidity management.

Earnings Insight: The Crown Jewels

For the income statement, the tale focuses on a mix of successes and areas for improvement. Notable revenues include operating revenues hitting $1.73B and EBITDA of $554.35M. A basic EPS of 1.01 signals earnings dispersal potential, while net income from continuing operations stood at $146.27M, with contributing factors being gross profit at $753.59M and total expenses at $1.42B.

The financial strength within Wynn’s fold sees retained earnings at -1.86B, indicating heavy historical losses still being accounted for. Nevertheless, stockholder equity is in the comfortably negative realm at -$109.82M, emphasizing the complex balancing act in managing debt while driving growth.

Market Reactions and Expert Analysis

Let’s dig into the reasons behind Wynn’s stock activities and speculate on the path forward. Recent upgrades frame Wynn as a target for bullish investors. Morgan Stanley’s upgrade to Overweight, with a golden price target of $104, suggests a favorable risk/reward balance. The bank sees growth potential radiating from the UAE and stronger footing in Las Vegas. Wynn’s low P/E ratio further sugar-coats this narrative, attracting value seekers.

More Breaking News

Organizational Moves: Funding and Settlement Dynamics

Wynn’s $800M private offering breaks the headlines for shareholders. At a coupon rate of 6.25%, these senior notes due in 2033 are designed to turn over aging debt, optimize the corporate structure, and provision for hefty expenditures. This strategic financial engineering could stabilize the cash flow landscape, fortify the balance sheet, and fund critical initiatives.

Macquarie and Jefferies Take on Target Adjustments

Price target adjustments by Macquarie and Jefferies reflect minor recalibrations. Macquarie’s lowering of the target from $126 to $122, alongside Jefferies’ cut from $87 to $81, induce nuanced investor skepticism. Yet, both maintain optimistic ratings of ‘Outperform’ and ‘Hold,’ respectively, showcasing diverse paths to investment returns predominantly driven by a fact-based risk reassessment.

Legal Clarity: $70M Settlement Footnote

Looming over Wynn was a hefty $70M settlement tied to securities fraud accusations. This resolution, which has a 9.4M dent directly on the Wynn books, brings closure to muddy waters. The insured remainder scoops up the financial slack, allowing investors to refocus on strategic expansion rather than historical drag.

Hudson Yards Vision: Future-Proofing Urban Development

Wynn’s colossal $12B joint venture with Related Companies is a marvel in urban planning. Plans for Hudson Yards aim to create thousands of jobs, amplify housing supply, and introduce the engaging Hudson Green park. The visionary approach in development reflects Wynn’s ambition and paints it as a long-term player not only in hospitality but urban rejuvenation.

Conclusion: The Road Ahead for Wynn

As Wynn Resorts navigates the convergence of upgrades, new offerings, and major investments, its strategic vision takes the front seat. The blend of risk adjustments by analysts and pragmatic financial decisions reflect a balanced approach to market volatility and business growth. Although recent settlements clean the slate, the path ahead demands keen navigation through fluctuating financial metrics and ambitious project timelines.

Wynn’s stock, currently ranging around $96 levels, might well be positioned for upward momentum as it capitalizes on these strategic moves and market sentiment recalibrates to its bold initiatives. Understanding these dynamics provides a richer perspective into Wynn’s potential trajectory, making the stock one to watch in the upcoming quarters.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”