Wynn Keeps Winning With Fresh Eyes on Vegas

While Macau pushes the company higher and higher, Wynn management sees a recovery on the horizon back home. This industry leader is a top pick.

May 2, 2014 at 4:15PM

Wynn Resorts (NASDAQ:WYNN) doesn't seem able to go anywhere but up, and it's easy to understand why. With the seemingly never-ending push of Macau gaming growth, the casino operator would be hard-pressed to miss this phenomenal growth wave. In contrast to Las Vegas Sands, Wynn is more focused on VIP gaming and less on mass-market. At times, that can create a more volatile business -- but it keeps high-rollers coming back for the most premium experience around. With one $4 billion-plus resort getting closer to opening day and another in the pipeline, the odds for this stock are well in investors' favor.

Win
Wynn Resorts surpassed analyst estimates by more than $0.20 per share as it achieved another round of double-digit net income growth (14.3%, in the just-ended quarter). Leading the way as usual was Macau, with slightly more than 14% growth in revenue, while Las Vegas revenue contracted by about 1.5%.

Investors need not worry about the Las Vegas segment, despite the sales drop. Steve Wynn, the founder and CEO of the company, is one of the best, most insightful voices in the industry. On the earnings call Thursday, Wynn alluded to "things that are happening that are worth discussing." Vegas profit was actually the highest it had been in some time, and the company believes that its strategy of quality over quantity (not pushing via room count) ultimately makes it the best player on the Strip.

Wynn wants investors to view the Las Vegas market as being in a state of catch-up. During the pre-Recession building boom, the Strip built up its capacity dramatically. Now, the demand may finally be ready to fill in that capacity.

Macau wows
As mentioned, Macau continues to drive the company ahead at incredible rates. Interestingly, though, management was more bullish on the mass-market segment than the VIP, perhaps due to the burgeoning middle class in China and surrounding areas. Turnover increased 23% in mass market (26% in VIP), though preliminary April figures show 55% gains at the mass tables.

Down the road, investors can look forward to Wynn doubling the size of its gaming presence in Macau. The company's Wynn Palace is expected to go online in the beginning of 2015, and the project is set to add more than 550 tables to the existing 492. Hotel room counts will rise markedly as well.

Analysts peg overall Macau 2014 growth anywhere from 14% to 22%, and Wynn will be right there to benefit going forward. Growth should keep up its double-digit pace through at least 2015 before slowing down. Even then, the company is poised to continue growing its share of the Macau gold mine via capacity increases and industry-leading slot machine efficiency.

The bottom line
Wynn certainly isn't a cheap stock at nearly 24 times forward estimated earnings, but this stock has the potential to continue the near vertical run it's been on over the past few years. Management is the best in the business, and the company's ability to get more out of each unit and segment than its competitors allows its smaller footprint to remain competitive with the larger players such as Las Vegas Sands.

In the red-hot gaming industry, this remains the top pick. Investors should keep an eye on the sleeper story here -- Las Vegas, with the comfort of Macau undoubtedly leading the numbers higher.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Michael Lewis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers