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Wynn Resorts Q4: Ending 2017 With a Win

By Eric Volkman – Jan 24, 2018 at 5:36PM

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Thanks largely to a revitalized Macau, the company posted some impressive growth figures.

It was a good day at the gaming tables for casino operator Wynn Resorts (WYNN 0.43%) in its Q4. The company's just-announced quarterly and yearly results that beat estimates and demonstrated encouraging growth in its crucial region. Let's glance at the numbers to see how the company did for the quarter and the year.

Macau is the place

In Wynn's final frame of fiscal 2017, it booked net revenue of $1.69 billion, which was nearly 30% higher on a year-over-year basis. These increases were due to the company's two properties in the Chinese gaming enclave of Macau.

Wynn Macau, the older of the pair, saw its take rise by $120 million, while Wynn Palace increased by almost $275 million -- although we should keep in mind that the year-ago period was the facility's first quarter of operation. Meanwhile, Wynn's adjusted net income nearly tripled, to $144 million ($1.40 per share).

Wynn Palace in Macau

Image source: Wynn Resorts.

Both results topped analyst estimates. On average, forecasts were for $1.56 billion on the top line and $1.38 per share for net profit.

For the entire fiscal year, Wynn's net revenue came in at $6.31 billion, a 41% year-over-year improvement. Adjusted net income climbed to almost $561 million -- 62% higher than the 2016 result.

Those strong growth numbers provided a nice lift to Wynn's stock. It closed at over $195 per share the day the results were announced, for a one-day pop of over 9%.

Wynn is benefiting greatly from a revival in the Macau gaming scene. The enclave has staged a nice recovery recently after many months of declining results. All told, Macau's gaming revenue clocked in at $33 billion in 2017, a sturdy 19% rise from the previous year.

The late 2016 opening of Wynn Palace, it turned out, was well-timed to take advantage of this. With its second Macau resort now fully in operation, Wynn is better poised to reap the rewards from being a major player there. Both it and its fellow U.S.-based operators active in Macau, Las Vegas Sands (LVS 0.53%) and MGM Resorts International (MGM -0.87%), have enjoyed renewed popularity, largely because of this.

One factor that sets Wynn apart from Las Vegas Sands and MGM, though, is that its pair of resorts target affluent gamers. And VIPs are fueling the Macau revival: Revenue from that segment jumped by 27% last year as opposed to the sub-10% increase of the mass market.

Playing a hot hand

As Macau goes, so go the top names in the American casino sector. I expect that, like Wynn, Las Vegas Sands and MGM will deliver much better China numbers in their upcoming Q4 and 2017 earnings releases.

That brings up some concern, however, particularly in Wynn's case. With the emergence of Wynn Palace, the company is tied even more to the broader fortunes of Macau's visitor numbers and spend. In Q4, 78% of its revenue derived from the enclave, up from the 71% in the same quarter of 2016.

The company is taking admirable strides to diversify its operations, with its Wynn Boston Harbor expected to open its doors next year.

Still, as we've seen, the Macau market can be fickle, so investors will be hoping that this revival has legs. The good news is that many analysts are predicting continued growth for at least this year and next.

These are sweet times for Wynn and its shareholders. Hopefully, lady luck -- and gaming economics -- will stay on its side.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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