Wynn Resorts (Nasdaq: WYNN) reported solid fourth-quarter earnings growth Tuesday afternoon on the strength of its Wynn Macau hotel and casino. However, CEO Steve Wynn cautioned that it may not be full steam ahead in Las Vegas, causing the stock to drop 4% to $114.60 in after-hours trading.
Overall, the company reported a 23% gain in adjusted property EBITDA to $196.9 million, with Wynn Macau accounting for the entire gain. Wynn Macau itself managed a $41 million increase in EBITDA to $99.6 million, thanks primarily to growth in high-end table games play (table games turnover in the VIP segment was up to $11.2 billion from $6.6 billion). Meaning, high rollers were on the prowl. Meanwhile, hotel REVPAR (revenue per available room) was up 16.6% to $237 for the quarter.
Meanwhile, Wynn Las Vegas posted a slight decline in EBITDA to $97.3 million from $101.2 million in Q4 2006, mostly because of a lower hold percentage (read: worse luck than last year). Interestingly, table games drop was up 21%, but while the company said in its earnings release that slot handle was flat at $1.1 billion, Wynn President Ron Kramer said on the conference call that slot handle was actually down "modestly," as the closure in the past year of Wynn's north-Strip neighbors -- Elad's New Frontier and Boyd Gaming's (NYSE: BYD) Stardust -- caused a loss in walk-in traffic.
But Kramer also said that the late December opening of Las Vegas Sands' (NYSE: LVS) Palazzo next door should help drive walk-in traffic.
In all, it was actually a pretty good quarter. That said, there is ample concern that generally weak economic conditions in the United States could impact the Las Vegas Strip, particularly the mass market consumer that make up a good portion of the businesses of MGM Mirage (NYSE: MGM) and Harrah's Entertainment. Still, though the high end of the gaming business -- the primary area where Wynn does business -- is generally considered to be more resistant to outside economic trends, Steve Wynn said that it would be "unsophisticated" to think that Las Vegas is somehow "immune" and that investors "probably should turn on the yellow light about how the Las Vegas market [should] respond."
And frankly speaking, I agree. But at the same time, I also think that after the recent industry- and marketwide nosedive, casino stocks in general might look pretty cheap right now to an opportunistic long-term investor.
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