Quick Win by the Algorithm: WYNN Continues Winning

Quick Win by the Algorithm

On March 3rd, 2017, the I Know First algorithm issued a bullish forecast for Wynn Resorts Ltd. (WYNN). WYNN had a signal of 173.03 and a predictability of 0.71. As a result, in accordance with the forecast, the company’s stock increased by 35.02% in just 3 months, showing a quick win by the algorithm.

Quick Win

Wynn Resorts Ltd. is a holding company, which engages in the development, ownership, and operation of destination casino resorts. It operates through the following segments: Macau Operations, Las Vegas Operations, and Corporate and Other. The Macau Operations segment is comprised of Wynn Macau and Wynn Palace. The Las Vegas Operations segment covers Wynn Las Vegas and Encore. The Corporate and Other segment is refers to the review of construction and development activities, and capital expenditures and assets for Wynn Boston Harbor development project. 

Quick Win

One of the most popular ratios used to calculate a company’s profitability is Return on Equity (ROE). The way to calculate ROE is: (Net Profit/Shareholders Equity).

An ROE of 20% or more is generally highly attractive to prospective investors. However, to put any ROE into perspective, one must look at the performance of the industry as a whole. Wynn Resorts Ltd. (WYNN) produced an ROE of 151.8% in the last year. The average performance of its industry was an ROE of 26.41% in the same period. Although, a simple ROE ratio doesn’t usually suffice. Value is generated for shareholders when an ROE is higher than the cost of equity. Despite no pre-determined return for investors, there’s a level of expectation. For WYNN, the return is 8.95%.

A popular method used to break down Return on Equity is The Dupont Formula.

  • (Annual Net Profit/Sales) – Profit Margin
  • (Sales/Assets) – Asset Turnover
  • (Assets/Shareholders’ Equity) – Financial Leverage

Margins and asset turnover indicate improved efficiency, while leverage is also of high importance. Profit margin highlights the operational efficiency of a company. The ideal being profit increasing at a higher rate than revenue. Asset Turnover ratio can be used to assess the quality of an ROE

CEO Steve Wynn is confident in the Las Vegas Market. Earlier in the month of April, he announce an expansion project in Las Vegas.  He plans to build on Wynn’s existing golf course for a one of a kind 1,000 room hotel and casino nestled in a 38 acre lagoon. The project is titled Wynn Paradise Park.

This bullish forecast on WYNN was sent to current I Know First subscribers on March 3rd, 2017. 

Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.