Wynn Resorts Stock Poised for Gains as Macau Operations Recover

Wynn Resorts stock, currently trading at $96 per share, has the potential for significant gains as the company's Macau operations show strong signs of recovery from the impact of Covid-19 restrictions. The stock, which has a market cap of $10.80 billion, a P/E ratio of 13.20, and a beta of 1.91, has been buoyed by positive developments in Macau's tourism and gaming industries.

Why this matters: The recovery of Macau's tourism and gaming industries has significant implications for the global economy, as it is a major hub for international tourism and a key driver of economic growth. A strong rebound in Wynn Resorts' stock could also have a positive impact on investor confidence and the broader stock market.

Tourist arrivals in Macau increased by a remarkable 79.4% in Q1 2024, indicating a robust rebound in the region's tourism sector. This surge in visitors, approaching 86% of pre-pandemic levels, bodes well for Wynn Resorts' operations in the area. Furthermore, mass gaming revenue in Macau reached an impressive $5.9 billion in Q4 2023, exceeding 2019 levels by approximately 5%.

Wynn Resorts has also been gaining market share in Macau, driven by its strong performance in the premium mass market segment and higher VIP rolling chip volumes. The company's iconic brand and high-end offerings position it well to capitalize on the expected long-term shift away from VIP gaming revenue toward nongaming and mass play. Analysts estimate that Wynn could capture a low-teen percentage gross gaming revenue share in Macau by 2024.

Despite the positive outlook, Wynn Resorts stock has experienced volatility in recent years. The stock saw a decline of 15% from levels of $115 in early January 2021 to around $95 currently, compared to a 40% increase for the S&P 500 over the same period. Returns for the stock were -25% in 2021, -3% in 2022, and 10% in 2023, while the S&P 500 returned 27%, -19%, and 24% in those years, respectively.

Looking ahead, some analysts believe Wynn stock could recover to its pre-inflation shock high of $140 per share, which would represent a gain of roughly 45% from its current price. The company's valuation is estimated to be around $105 per share, about 10% higher than the current market price. However, concerns about the global economy and a potential slowdown in consumer spending could limit the stock's upside in the near term.

Institutional investors and hedge funds currently own 68.87% of Wynn Resorts stock, with several prominent firms modifying their holdings in recent months. The company reported earnings per share of $1.59 for the latest quarter, beating analysts' consensus estimates by $0.16. Wynn Resorts also announced a quarterly dividend of $0.25 per share, representing an annualized dividend of $1.00 and a yield of 1.04%.

As Macau's tourism and gaming industries continue to recover, Wynn Resorts appears well-positioned to benefit from the positive trends. With its strong brand, high-end offerings, and growing market share in the premium mass market segment, the company's stock has the potential for significant gains in the coming months. However, investors should remain mindful of the broader economic context and potential headwinds that could impact the stock's performance.

Key Takeaways

• Wynn Resorts' Macau operations show strong signs of recovery from Covid-19 restrictions.
• Tourist arrivals in Macau increased 79.4% in Q1 2024, nearing pre-pandemic levels.
• Wynn Resorts gains market share in Macau, driven by premium mass market segment.
• Analysts estimate Wynn stock could recover to $140 per share, a 45% gain from current price.
• Institutional investors own 68.87% of Wynn Resorts stock, with a 1.04% dividend yield.