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Amid ongoing lethargy in Macau and Las Vegas — its two largest operating markets — Wynn Resorts (NASDAQ: WYNN) delivered a downbeat set of third-quarter results late Thursday, but some analysts remain constructive on the battered casino stock.
For the quarter ending Sept. 30, Wynn earned 33 cents a share on revenue of $1.69 billion. Analysts expected earnings per share of 59 cents on sales of more than $1.7 billion. The operator’s adjusted property earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) slumped by nearly $106 million to $464.2 million. Despite the disappointing quarterly numbers, Wynn stock pointed higher in midday trading as some analysts highlighted opportunity with the shares.
“We continue to believe WYNN’s premium focus in Las Vegas remains overlooked/undervalued. The United Arab Emirates (UAE) project remains on track for a September 2027 opening,” wrote Stifel analyst Steven Wieczynski in a report to clients. “We continue to believe based on current trading levels that either WYNN’s UAE project or their Macau assets remain grossly undervalued/underappreciated (or not even a value ascribed). Given WYNN’s premium focus we continue to believe it represents the most interesting/misunderstood name under our gaming coverage and believe shares remain massively undervalued.”
Like its peers, the Wynn Macau business remains challenged and while it may not be saying much, Wynn’s Las Vegas operations are pacing ahead of rivals due to the company’s focus on high-end consumers.
Wynn Talks Las Vegas Land, Texas
On a conference call with analysts, Wynn CEO Craig Billings said the company has “started to doodle and think about” plans for its unused real estate in Las Vegas — property that by some estimates is worth $1 billion or more.
“…What relationship that property might have to our existing assets and how we might be able to build probably at a lower all-in dollar cost than a freestanding integrated resort by leveraging its relationship to Wynn and Encore. So we’ve started to think about that,” he said on the call.
Acknowledging that high-growth jurisdictions are hard to come by in the U.S. regional casino market, Billings discussed Texas. In Tuesday’s midterm elections, Democrats swept all the major statewide offices in Texas, stoking optimism that gaming expansion is on the table there.
“So it’s kind of a stealth market that is giant. And so of course, we would consider opportunities there. I think our brand has resonance there,” said the Wynn CEO. “We have a great database from Texas here in Las Vegas.”
Wynn UAE Update
With the war in Iran not resolved, Wynn’s upcoming integrated resort in the United Arab Emirates (UAE) is an increasing point of emphasis for the investment community.
“Wynn Al Marjan Island is still targeted to open in September 2027. Management commentary suggests that based on the factions of potential customers, there are multiple paths to success at the property,” wrote Jefferies analyst David Katz in a note.
The casino operator detailed remaining equity needs in the UAE of $465 million to $590 million, which is below the forecast delivered in the second quarter.
“Based on our math, we still believe the UAE project could be worth $19-$25 in today’s dollars, and we believe this type of value has been essentially excluded from current trading levels,” adds Stifel’s Wieczynski.