Cotai Is Still Gaming's Hotspot

Results from Wynn Resorts (NASDAQ: WYNN  ) last week show gaming growth continuing to move to Cotai in Macau. The company was able to grow revenue slightly but it didn't keep pace with Macau as a whole. The Fool's Erin Miller sat down with Travis Hoium to see what we can take from these numbers and whom to watch during earnings season.¬†

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  • Report this Comment On April 30, 2013, at 1:09 PM, spokanimal wrote:

    One of the key metrics that seasoned analysts use when discussing gaming companies is the concept of the "normalization" of earnings.

    Because Travis Hoium is a young fellow who's still learning about the both the gaming industry and the methodologies that veteran analysts use, the analogies he uses are much less useful than something that someone like Grant Chum at UBS might put out there.

    "Normalization" is the process of equating gaming revenues to what they would be if the company had "normal luck". It works a lot like the concept of "same store sales" in the retail industry so that a more realistic sense of operational performance can be portrayed.

    In the case of Wynn, Mr. Hoium mentioned their roughly 4% improvement in revenues, but Wynn resorts posted very good "table hold" (eg: luck) in both Macau and Vegas during the quarter, so those revenues were substantially over-stated relative to the performance that the company actually put up.

    The upshot: ALWAYS contrast analogies put forth by young amateurs like Mr. Hoium with those of seasoned pros in the industry. It may cost you some $dough to get those superior analogies, but it could well save you the high cost of mis-information.


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