Wynn Resorts, Limited WYNN is likely to benefit from sports-betting expansion, improving visitation and non-gaming revenue boosting strategies. However, a decline in traffic from pre-pandemic levels is a concern.
Let us discuss the factors highlighting why investors should retain the stock for the time being.
Growth Catalysts
Wynn Resorts has been focusing on sports betting to drive growth. To focus on online betting, the company announced the merger of Wynn Interactive with Austerlitz Acquisition Corp. The company will invest $640 million to drive growth. WynnBET sports betting and online casino application were operational in New Jersey for quite some time.
In the second quarter of 2021, the company progressed with new product delivery and marketing program, particularly for the NFL 2021 football season. This includes web application launches in Indiana, Colorado, Tennessee, New Jersey and Virginia. It strengthened third-party partnerships through agreements with the Detroit Lions, the Colorado Rockies and Cumulus Media. The company also collaborated with several engaging content creators to develop a unique sports-themed program. During fourth-quarter 2021, Wynn Interactive generated nearly $785 million in turnover across casino and sports betting. Going forward, the company anticipates solid revenue generation on the back of new product features and a unique marketing campaign.
Although the company’s business in Macau and Las Vegas has been affected by the coronavirus pandemic, the demand has gradually improved. The company’s full-scale integrated resort in Cotai, Macau, is poised to witness increased visits from tourists and leisure gamblers over the long term. This is likely to strengthen its position in the Cotai strip. Such projects are expected to draw business and leisure travelers and provide a solid platform for growth. In fact, building resorts in Boston and Macau will aid Wynn Resorts to capitalize on strong consumer spending trends in the region.
Wynn Resorts generates a solid share of revenues from Macau resorts. Apart from the gaming business in Macau, it has been focused on driving non-gaming revenues. In fourth-quarter 2021, the company’s non-gaming business witnessed robust growth owing to strength across F&B and retail. Recently, the company entered into a definitive agreement with Realty Income Corporation for the sale-leaseback of its real estate at Encore Boston Harbor. Valued at $1.7 billion, the financing and capital structure decision is likely to enhance the company’s financial flexibility in retiring its near-term debt and deploying capital to construct additional parking and complimentary non-gaming amenities. The company anticipates closing the deal by the fourth quarter of 2022, subject to regulatory approvals.
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So far this year, shares of Wynn Resorts have fallen 10.4% compared with the industry’s 23.5% fall.
Concerns
Wynn Resorts’ results in 2021 were negatively impacted by the coronavirus crisis. During fourth-quarter 2021, the company witnessed a dismal performance in the Macau region owing to subdued visitation. Notwithstanding the easing of certain COVID-19 protective measures by authorities worldwide, certain travel restrictions, quarantine measures, testing requirements and capacity limitations remain in effect at its Macau Operations. Considering the uncertainties, it is likely to take time for visitation to attain pre-pandemic levels.
Zacks Rank & Key Picks
Wynn Resorts currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. FNKO, RCI Hospitality Holdings, Inc. RICK and Bluegreen Vacations Holding Corporation BVH.
Funko sports a Zacks Rank #1 at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of the company have declined 22.4% in the past year.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS (earnings per share) suggests growth of 22.6% and 26.8%, respectively, from the year-ago period’s reported levels.
RCI Hospitality carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 63.2%, on average. Shares of the company have declined 9.5% in the past year.
The Zacks Consensus Estimate for RCI Hospitality’s 2022 sales and EPS suggests growth of 33.9% and 19.6%, respectively, from the year-ago period’s levels.
Bluegreen Vacations presently carries a Zacks Rank #2. BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has increased 26.1% in the past year.
The Zacks Consensus Estimate for BVH’s current financial year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.
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Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
RCI Hospitality Holdings, Inc. (RICK) : Free Stock Analysis Report
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Bluegreen Vacations Holding Corporation (BVH) : Free Stock Analysis Report
