Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



What Happened to Wynn Resorts?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Casino and gaming giant Wynn Resorts (Nasdaq: WYNN  ) recently posted an unlucky third quarter as earnings failed to meet market expectations. The struggling home casino market in Las Vegas took off some shine from the business boom in thriving Macau.

Let's take a closer look.

Quick numbers
Revenue rose to $1.3 billion, a 30% year-over-year increase. Although the company posted net income of $127 million compared with a loss of $33.5 million last year, its adjusted earnings per share of $1.05 fell short of the market expectation of $1.18.

Wynn owns two casino-based resorts in Las Vegas that account for nearly 30% of its revenues. But post-recession, the Las Vegas gaming industry has suffered, and Wynn's Vegas revenue saw a steep 8.3% decline this quarter. But the biggest reason for the plunge was the fall in company's win ratio in Vegas, to 18.3% from 22.8% last year.

High occupancy rates and increased prices for rooms helped the company earn better revenues in other business segments. However, this business can't match the volume of money generated by the casino segment.

Macau magic
Wynn Macau's 42% revenue growth in this quarter is no surprise to me, as Macau has been on a tear lately. The company derives nearly 70% of its revenue from this hot gaming market.

The VIP segment of the casinos had much to do with the steep growth, contributing 45% higher revenue over last year, while the mass-market segment was up by 16%.

It also bears noting that the Macau government recently announced that it will keep the gambling-table cap fixed at 5,500 until 2013. The combined table count in Macau, including those of casino operators Las Vegas Sands (NYSE: LVS  ) , Melco Crown Entertainment (Nasdaq: MPEL  ) , and MGM Resorts (NYSE: MGM  ) , is already up to 5,379 tables, so there isn't much room for table growth in the next two years.

The Foolish bottom line
Wynn Resorts has done well with its growth over the past two years. The poor quarterly performance resulting from weakness in Las Vegas is, however, a concern. I'm staying cautious and waiting for better numbers. To find out when that happens, make sure to add Wynn to our personalized watchlist service, My Watchlist. It's free, and it helps you constantly stay updated on news and analysis on your favorite companies.

Fool contributor Navjot Kaur owns no shares in any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1579969, ~/Articles/ArticleHandler.aspx, 10/24/2016 3:13:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
LVS $57.16 Down -0.74 -1.28%
Las Vegas Sands CAPS Rating: ****
MGM $26.10 Down -0.02 -0.08%
MGM Resorts Intern… CAPS Rating: ***
MPEL $16.37 Down -0.20 -1.21%
Melco Crown Entert… CAPS Rating: ****
WYNN $95.27 Down -0.73 -0.76%
Wynn Resorts CAPS Rating: ****