Wynn Resorts Ltd (WYNN)

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Betting On A Wynn Resorts Recovery? 2 Stock Strategies Plus A Bull Call Spread
By: Investing.com | April 25, 2022

• Casino resort heavyweight Wynn Resorts shares have underperformed
• COVID-19 outbreak in China may effect Macau operations
• Long-term investors could consider buying shares at current levels

Shareholders in the Nevada-based casino stock Wynn Resorts (NASDAQ:WYNN) have seen the value of their investment go down more than 41% over the past 52 weeks, and 13.9% year-to-date. By comparison, the VanEck Gaming ETF (NASDAQ:BJK) declined 16.7% in 2022 and 31.4% in the past year.


Wynn Resorts Weekly

On June 2, 2021, WYNN shares went over $136, and hit a 52-week high. Those readers who pay attention to technical charts, especially price and time cycles, may want to watch early June as a potential turning point in price.

How Recent Metrics Came In

Wynn Resorts, released Q4 2021 figures on Feb.15. Operating revenue came in at $1.05 billion, up 53.5% year-over-year. While the company's Las Vegas and Encore Boston Harbor operations contributed positively to the top line, revenue from the Macau operations decreased from a year earlier.

Net loss attributable to Wynn Resorts was $177.2 million or $1.54 per diluted share in Q4 2021 vs. $2.53 loss per diluted share of Q4 2020. Cash and equivalents stood at $2.52 billion. Meanwhile, total current and long term debt was $11.93 billion.

Management expects to close on the sale leaseback of Encore Boston Harbor in Q4. The transaction will provide $1.7 billion in long term capital for Wynn Resorts.

On the results, CEO Craig Billings said:

“We were excited to announce our plans to develop and manage a luxury integrated resort in the UAE, along with our partners, Marjan and RAK Hospitality Holding. The project further diversifies our business, extending our brand into the Middle East and Europe.”

Prior to the release of the Q4 results, Wynn Resorts shares were trading around $95. But on Apr. 22, they finished the week at $73.20.

This decline means WYNN shares have lost roughly 23% since the earnings announcement. Finally, the stock’s 52-week range has been $66.33-$136.83, while the market capitalization (cap) currently stands at $8.5 billion.

What To Expect From WYNN Stock

Among 15 analysts polled via Investing.com, WYNN stock has an "outperform" rating.


WYNN Consensus Estimates

Source: Investing.com

Wall Street also has a 12-month median price target of $105.88 for the stock, implying an increase of almost 45% from current levels. The 12-month price range currently stands between $73 and $139.

However, according to a number of valuation models, like those that might consider P/S multiples or terminal values, the average fair value for WYNN stock at InvestingPro stands at $80.60.


WYNN Valuation

Source: InvestingPro

In other words, fundamental valuation suggests shares could only increase about 10% and that there is high uncertainty regarding future performance.

We can also look at WYNN’s financial health as determined by ranking more than 100 factors against peers in the consumer discretionary sector.

For instance, in terms of cash flow and growth, it scores 2 out of 5 (the highest score). Thus, its overall standing points points to a rather weak performance ranking.

We have to remember that like many travel and leisure shares, WYNN stock has suffered significantly during the pandemic. Furthermore, in recent weeks, rising Covid-19 numbers in China have increased question marks over how the rest of the year will shape up for Wynn and its peers. Now, WYNN bulls are hoping that the company will turn around and begin to create shareholder value soon.

Our expectation is for WYNN stock to build a base between $67.5 and $72.5 in the coming weeks. Afterwards, shares could potentially start a new leg up...

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