Wynn Resorts Stock Analysis: Defying Expectations to Revive a Dying Market

    The article was written by Harry Chiang, a Financial Analyst at I Know First.

Wynn Resorts Stock Analysis

“My organization, my colleagues and I, are paid to run hotels in good times and fair times. We’re professionals. That’s what we do. I don’t give a damn about the short-term market implications. This is not a company that gives a damn about short-term markets.” Steve Wynn, Chairman and CEO of Wynn Resorts, Limited.

Wynn Resorts Stock Analysis


  • Wynn Resorts Displays Increasingly Stronger Financial Reports.
  • Wynn Palace is Disrupting Macau’s Market With Impressive Returns.
  • Macau is Making a Return as a Gambling Haven
  • Wynn Resorts Still Has Tricks Up Its Sleeve


Looking at Wynn Resorts today, it’s difficult to believe that the company was born from a place of strife. Steve Wynn founded the company in 2002 after selling Mirage Resorts to MGM Grand in a hostile takeover in 2000. He had previously led Mirage and its predecessors since 1973. However, one thing that has remained the same all these years is Wynn’s tough business mentality and resolve. Despite facing problems with Mirage, Wynn immediately laid the foundation for his future empire by purchasing Desert Inn for $270 million.

At the time, Wynn needed support and turned to Japanese billionaire Kazuo Okada of Universal Entertainment Corporation. Rounding out his team with Ronald Kramer, Wynn made an initial public offering for Wynn Resorts Limited (NASDAQ: WYNN) in 2002. The company wasted no time and opened Wynn Las Vegas in April 2005. It is now perhaps one of the most iconic luxury integrated resorts in Vegas and cost Steve Wynn a cool $2.7 billion to build.

From then on, Wynn Resorts set its eyes on expanding globally. The company’s second project Wynn Macau opened in September 2006. 2006 also marked the expansion of Wynn Las Vegas, with its extension, Encore. Encore has been awarded the AAA Five Diamond Award every year since opening. It is the world’s seventh largest hotel. Furthermore, together with Wynn Las Vegas, it holds more Forbes five-star awards than any other casino-resort in the world.

The company has since been through troubled times, losing vice chairman Kazuo Okada to a public dispute involving corruption in the Philippines gaming industry. This led to Aruze USA selling back its shares at a nearly 30% discount. Aruze had been the company’s largest shareholder, with a 19.7% stake. However, since then, Wynn’s sharp business acumen has pushed project after project to success. As of 2016, the company has developed 5 properties and has many more in the planning.

Wynn Resorts Stock Analysis

Wynn Resorts’ Improving Financial Reports

After hitting a low at $51.50 in September 2015, the WYNN stock value has steadily risen, and is currently at $134.46 on an upwards trend. This year alone, from January onward has seen growth from $86.66 upwards. Wynn Resorts’ continually improving financial reports back up these statistics.

On January 26, 2017, Wynn Resorts reported financial results for the fourth quarter and year ended December 31, 2016. Net revenues were $1.30 billion, an increase of 37.3% from $946.9 million for the same period of 2015. Furthermore, net income was $113.8 million for Q4 2016, an increase of 30.5% from $87.2 million for the same period of 2015. In addition, Adjusted Property EBITDA was $340.9 million for the fourth quarter of 2016. This was an increase of 18.6% from $287.5 million for the same period of 2015. These numbers are an improvement over previous quarters, and Q4 2016 numbers were also an improvement on preceding financial reports.

This improvement is evident looking at the full year statistics. Net revenues were $4.47 billion in 2016. This was an increase of 9.6% from $4.08 billion for the same period in 2015. Net income was $242.0 million, compared to $195.3 million for the same period of 2015. The increase in net income was primarily due to a loss of extinguishment of debt experienced in the prior year.

Furthermore, Wynn Resorts first quarter financial reports excite investors. The reports indicate future growth and an improving company. On April 25, 2017, Wynn Resorts reported financial results for the first quarter ended March 31, 2017. Net revenues were $1.48 billion. This was an increase of 47.9% from 997.7 million for the same period of 2016. Furthermore, the net income was $100.9 million, a 34% increase. In addition, Adjusted Property EBITDA was $427.5 million for Q1 2017, an increase of 42.4%.

Overall, these improved financial results are a good indicator that Wynn Resorts has its eyes on growth and it is working towards upward trending finances.

Wynn Resorts Stock Analysis

Wynn Palace is Disrupting Macau’s Market With Impressive Returns

Wynn Resorts owes much of its recent financial reports’ success to the opening of Wynn Palace in the third quarter of 2016. Steve Wynn described it as “the most aggressive, ambitious, and lovely project” undertaken by Wynn Resorts. The integrated resort features a luxury hotel with 1706 rooms, a casino, an 8-acre performance lake, 29 floors, and a construction floor area of around 450,000 square meters, all nestled on the Cotai Stip in Macau.

Many questioned this move on Steve Wynn’s part, citing Cotai’s steadily dropping gambling profits and the government’s crackdown on corruption. However, Wynn’s vision paid off and Macau’s gross gaming revenue grew 1.1% for the month of August to $2.4 billion. Analysts credited this growth to Wynn Palace and stated that Macau was experiencing a market revival. Wynn Palace led the net revenue of Wynn Resorts with $418.7 million in the fourth quarter of 2016. This increased to net revenue of $475.8 million from Wynn Palace in the first quarter of 2017. Wynn Palace has individually managed to offset losses by the other Wynn Resort properties.

Chairman and CEO Steve Wynn said that Wynn palace has exceeded company projections, with increased occupancy and “good mass market activity”. JP Morgan agrees with this assessment and has stated that the business pick-up Wynn Palace is experiencing, combined with the leading revenue figures “suggests that Wynn Palace is ramping up nicely, without cannibalizing its peninsula property too much”.

Many analysts have changed their ratings of WYNN from “Hold” to “Buy” due to the strong showing by Wynn Palace. For example, Argus” John Staszak stated, “Despite stiff competition, results at the Wynn Palace in Macau, which opened in August 2016, have shown consistent improvement, with occupancy and room rates both rising in the fourth quarter”. This is supported by the gambling statistics on Wynn Palace. In Q4 2016, the average table game at Wynn Palace generated $14,926 in revenue per day. Although it was less than the $21,559 in revenue per table per day at Wynn Macau, it was significantly more than other hotel-casinos in Cotai operated by Las Vegas Sands.

Overall, Wynn Palace looks to be an incredibly powerful spearhead for Wynn Resorts, both as a financial asset and an expansionary statement. Investors seem to agree and Wynn Palace has led steady growth for the past two quarters.

Wynn Resorts Stock Analysis

Macau is Making a Return as a Gambling Haven

Macau is infamous for gambling. Authors and directors have made countless books and movies made about it. So much so, that it earned the moniker the “Monte Carlo of the Orient”. Currently, gambling tourism accounts for over 40% of Macau’s GDP. Furthermore, gambling taxes make up 70% of Macau’s government income.

Recently, investors have been dubious about Macau’s gambling environment. This is due to two factors. The first is that the gambling business is not particularly susceptible to technological advancement or productivity growth. There’s only so far it can go. The second is that Xi Jinping promised to crack down on corruption across mainland China casino profits. Hence, there was a lot of criticism when Steve Wynn announced the development of Wynn palace.

However, in 2017, Macau has been experiencing a revival in the gambling economy. There is a positive feedback loop between Wynn Palace and Macau. In other words, Wynn Palace helped boost Macau’s gambling industry, which in turn has boosted Wynn Palace’s business, which then helps Macau once more. The top three Hong Kong-listed stocks, Sands China, Wynn Macau, and Galaxy Entertainment have added $20 billion in market value. This translates to a rise of 18% in revenues from gambling in Macau. Wynn Palace is in a good place to take the lead in this reviving market. When Wynn Palace opened in August, it had 9% of the market. In the first quarter, this increased to 13% and it is recently past 16% of market share.

Wynn Resorts Stock Analysis

Wynn Resorts Still Has Tricks Up Its Sleeve

In hopes that Steve Wynn can pull of more of his magic, the board of Wynn Resorts approved the construction of its $1.5 billion Paradise Park, a planned white sand lagoon waterfront in Las Vegas. This includes a 38-acre lagoon surrounded by an entire industry of restaurants, housing, and entertainment. Steve Wynn has visions of transforming the Las Vegas experience entirely and if he’s right, it could be a massive victory for Wynn Resorts.

The company is also planning on building its Wynn Boston Harbor resort outside Massachusetts and expects to open the complex in mid-2019. Estimates project the cost around $2.4 billion. This is again another expansion in to an unusual region for Wynn, but one that could pay off. If successful, it could herald an entire new Wynn-branded category of hotels.

Wynn Resorts Stock Analysis


Although not explicitly listed as a reason to be excited about Wynn Resorts’ future, Steve Wynn is a very, very good reason to keep your eyes out on the company. He has been a savvy and tough businessman since the days of the Mirage and, although unnerving at times, he is a strong pick to lead Wynn Resorts through this period of growth. Thus, thanks to Wynn’s exciting new projects and plans, Wynn Resorts is poised to have high potential returns later. We are maintaining a bullish forecast of the stock. I Know First’s algorithm forecast the stock as a long term investment.

Past I Know First Forecast Successes With WYNN:

In such as the one dated on March 3, 2017, the algorithm accurately forecast a signal for WYNN.  In a 3 month time span, the stock rose steadily by 35.02%. The stock has since continued to rise.

Wynn Resorts Stock Analysis

Below is the latest forecast I Know First algorithm released as of today on June 20, 2017.  If we were to compare the forecast back in March 3, 2017, we can see both forecasts rate WYNN as a buy.  If the previous forecast on March 2017 accurately predicted the stock would increase and it did by over 30%, the latest forecast below could indicate another high rate of return.

The predictability increases in the long term, indicating that WYNN is a strong investment in the long term.

Wynn Resorts Stock Analysis

This forecast was sent to I Know First subscribers on March 3, 2017.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go. (positive = to go up = Long, negative = to drop = Short position). The signal strength relates to the magnitude of the expected return. We use the signal strength for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. It allows the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.