Shares of Wynn Resorts (WYNN -0.74%) fell as much as 10% early Friday, then pared their gains to close down 5.7% in spite of solid quarterly results from the hotel and casino operator.
For its third quarter of 2023, Wynn's operating revenue climbed 87.9% year over year to $1.672 billion, translating to adjusted (non-GAAP) net income of $112 million, or $0.99 per share. Analysts, on average, were expecting earnings of $0.80 per share on revenue of $1.58 billion.
Wynn Macau leads the way
Wynn CEO Craig Billings said the quarter reflected "continued strength across [Wynn's] property portfolio," noting that Wynn Las Vegas and Encore Boston Harbor achieved quarterly records for adjusted property EBITDAR (or earnings before interest, taxes, depreciation, amortization, and restructuring costs, a slight variance from the more common EBITDA metric). On a consolidated basis, Wynn Resorts generated adjusted property EBITDAR of $530.4 million, up from $173.5 million in last year's third quarter.
Wynn's Macau businesses shined particularly bright this quarter, enjoying a sustained recovery with outsized strength from its mass gaming, luxury retail, and hotel businesses in the region; Wynn Macau saw revenue soar to $295 million from just over $40 million in last year's third quarter, generating adjusted property EBITDAR of $77.9 million, while Wynn Palace revenue soared to $524.8 million from $75.2 million in the same year-ago period, generating adjusted property EBITDAR of $177 million.
What's next for Wynn Resorts stock?
Separately on Thursday, Wynn also struck a tentative five-year union agreement covering around 5,000 of its Las Vegas Strip workers, narrowly averting a potential strike mere hours before its 5 a.m. deadline this morning. According to the Culinary Workers and Bartenders Union yesterday, the deal includes the largest wage increases ever negotiated in the union's 88-year history. Wynn's agreement followed similar deals struck with the union by fellow casino and hotel operators MGM Resorts and Caesars Entertainment earlier this week.
In any case, perhaps the market was hoping for an even more pronounced recovery from Wynn's Macau businesses. But in my view, there was little not to like in this encouraging quarterly update from Wynn, and the leading casino stock increasingly looks like a more compelling bargain for patient, long-term investors willing to bet on its sustained rebound.
