The earnings season started with a dud in the gaming industry as even growing revenue in Macau wasn't enough for Wynn Resorts (Nasdaq: WYNN ) to please Wall Street this quarter.
On the surface, the results looked promising. Revenue growth year over year is strong and so is EBITDA growth. But when compared to the first and second quarter, Wynn looks like it's going backward, especially in Las Vegas.
Let's start in Macau, where revenue was $951.4 million, a 41.7% increase from a year ago but a 2.6% drop from last quarter. Property EBITDA tells the same picture at $296 million, up 49.5% from a year ago but down 5.8% from a quarter ago.
Las Vegas was even worse, where revenue only grew 3.7% over last year to $346.9 million. Net casino revenue fell 8.3% despite the fact that gaming revenue for the three months ended in August on the Las Vegas Strip grew 6%. Property EBITDA fell almost in half from the second quarter to $85.1 million.
Losing share in Macau
Other casino operators may have taken a hit along with Wynn yesterday, but I think they might be beneficiaries of Wynn's bad fortunes. Gaming revenue in Macau grew 7% from the second to third quarters, and if Wynn was down, someone else had to be up.
This could be a movement of gaming to the Cotai Strip, where Las Vegas Sands (NYSE: LVS ) and Melco Crown (Nasdaq: MPEL ) dominate the landscape and Galaxy opened a new resort this year. Wynn and MGM Resorts (NYSE: MGM ) will join the lucrative gaming area in time, but for now they're stuck on the Macau peninsula, where the older SJM casinos lie.
Foolish bottom line
The market has reacted harshly, but it's too early to tell if the move in gaming away from Wynn is a long-term trend. The Galaxy Macau opening surely brought new customers to the Cotai area, but it's unclear if they'll stay there beyond the third quarter. I'll keep a close eye on this trend in coming quarters, but if shares continue to fall it may be time to take a gamble on Wynn Resorts.