Wynn Resorts (WYNN) – Chinese Gamblers Have a Good Run at Baccarat

October 19, 2011
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Wynn Resorts (WYNN) reported results which missed expectations as earnings came in at $1.05 per share vs. street estimates of $1.19. Steve Wynn reported that the “hold” percentage was abnormally low which impacted gaming take by about $15M. When pressed on this he mentioned that Chinese gamblers had a good run at baccarat and had some good days of winning $5M, $6M, $7M (would have been fun to be part of that crew). Normalized hold rates would have amounted to another $0.12 in EPS or earnings of $1.17 which would have been essentially in-line. Nonetheless, Wynn has a high valuation and the stock is off over 5% in the after-hours from $130 to $123.

In terms of the read per current trends – it sounds like Vegas business is solid in October. Convention bookings are robust. ADR is improving by over 20%.

With regard to Macau, Steve was asked numerous time if credit is drying up or if business is slowing. He simply answered “No it isn’t”. Macau EBITDA year-to-date is up 46.7%. The Cotai property sounds like it will be grandiose and impactful.

When asked about the potential for US resort development in Massachusetts or Florida, Steve mentioned that both are looking promising. He proclaimed that he is: “feeling very positive in a preliminary way”. It appears Wynn may hold off on a special dividend this year in order to keep capital available for a new project if the politics work out. Last year WYNN paid an $8 special dividend.

Finally, no Wynn Resorts conference call would be the same without an excellent political tirade from Steve. Here is today’s – fast forward to the final question:

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