Wynn Resorts (WYNN) is an American corporation that develops and operates high-end hotels and casinos. The corporation was founded in 2002 in Paradise, Nevada, and is currently run by CEO Matthew Maddox.
I am neutral on Wynn Resorts as its strong support from Wall Street analysts is offset by its elevated valuation multiple and lack of profitability at the moment. (See Analysts’ Top Stocks on TipRanks)
Strengths
Wynn Resorts have created six properties as of 2020. Over the period of nine months ended September 30, 2021, the company’s Las Vegas and Encore Boston Harbor have resumed full operations, including opening their gaming areas to 100% capacity and restoring its seven-days-a-week hotel operations, in compliance with government authorities and in response to customers’ increasing demand.
Recent Results
Wynn Resorts reported operating revenue of $994.6 million for the third quarter of 2021, showing an increase of more than 37% from the $370.5 million generated in the third quarter of 2020. Breaking it down further, operating revenue increased $165.6 million at Wynn Palace, $79.3 million at Wynn Macau, $289.3 million at Las Vegas Operations, and $75.5 million at Encore Boston Harbor compared to the third quarter of the previous year.
Wynn Resorts also posted a net loss of $166.2 million or a diluted net loss of $1.45 per share for the third quarter of 2021. This is an improvement compared to the net loss of $758.1 million and loss per share of $7.10 in the previous year’s quarter.
In addition, the company also saw a positive adjusted property EBITDA of $154.6 million for the third quarter of 2021, compared to -$65.9 million in adjusted property EBITDA in the third quarter of 2020.
Wynn Resorts’ Macau Operations segment saw operating revenues of $181.3 million for Wynn Palace compared to $15.7 million for the third quarter of 2020. The company also had operating revenues of $130.7 million for Wynn Macau compared to $51.4 million generated in the third quarter of 2020.
Wynn’s Las Vegas Operations segment saw operating revenue of $476 million from the $186.7 million generated in the previous year’s third quarter. Its Encore Boston Harbor segment reported operating revenues of $192.2 million compared to $116.7 million in Q3 2020.
The company’s cash and cash equivalents amounted to $2.48 billion as of September 30, 2021.
Valuation Metrics
WYNN stock looks a bit pricey here as its forward enterprise-value-to-EBITDA ratio is 18x compared to its five-year average of 15.6x. The company is also currently running a loss on a normalized earnings basis and is not expected to reach 2019 revenue or profitability levels by year-end 2022.
Wall Street’s Take
Turning to Wall Street, Wynn Resorts earns a Moderate Buy consensus rating based on five Buys and six holds assigned in the past three months. Additionally, the average Wynn Resorts price target of $108.11 puts the upside potential at 22.6%.
Summary and Conclusion
Wynn Resorts enjoys strong Wall Street analyst support, and the consensus price target implies solid upside for the stock over the next year.
On the other hand, the valuation multiples look elevated relative to the company’s history. WYNN is not running a profit at the moment as it continues to be plagued by lingering COVID-19 headwinds. As a result, it might be prudent for investors to wait for a pullback before adding shares.
Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.
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