Shares of Wynn Resorts Ltd. WYNN surged over 9% in the after-hours trading session on Dec 8 following the announcement that Chairman and Chief Executive Officer, Stephen A. Wynn, has purchased about 1 million shares of the company.
Wynn bought a total of 1,003,977 shares of Wynn Resorts from the market between Dec 4 and Dec 8. This brings his total holding in the company to 11,070,000 shares and strengthens his position as the largest individual stakeholder.
Increasing his stake reflects Wynn’s confidence in the company; a much needed positive considering Wynn Resorts’ weak performance this year. Shares have tanked nearly 60% year-to-date on worries about the company’s business in Macau. The sluggish business in Macau can be attributed to the fact that high-stake gamblers are curtailing spending amid a cooling Chinese economy. Also, the nationwide crackdown on corruption in China has compelled Macau officials to impose strict restrictions on VIP gamblers.
These have translated into lower revenues and earnings for the company. Wynn Resorts has missed the Zacks Consensus Estimate for revenues for four consecutive quarters. Also, the company reported lower year-over-year revenues and earnings during the third quarter (results announced on October 15). We expect further weakness as Wynn Resorts is anticipated to witness a massive earnings decline of about 61% this year compared with an industry average decline of just 5%.
Zacks Rank and Stocks to Consider
Wynn Resorts currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the gaming industry are Boyd Gaming Corporation BYD, Isle of Capri Casinos, Inc. ISLE and Century Casinos Inc. CNTY. While Boyd Gaming and Isle of Capri sport a Zacks Rank #1 (Strong Buy), Century Casinos has a Zacks Rank #2 (Buy).
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