Shares of Wynn Resorts, Limited WYNN have outperformed its industry so far this year. The stock has gained 82.8% as compared with the industry’s 39.9%.
Moreover, upward revision in earnings estimates for the current and next year reflects analysts’ unwavering confidence in the company. Over the past two months, current and next year earnings estimates inched up 10.1% and 9.4%, respectively. The company also delivered positive earnings surprises in three of the trailing four quarters, the average beat being 15.4%.
Per our VGM Score, which identifies the most attractive value, growth and momentum characteristics, Wynn Resorts has a Growth Score of A reflecting the stock’s high growth potential.
Why Pick Wynn Resorts?
Estimated Earnings and Revenues: A strong brand portfolio and vigorous domestic expansion lend Wynn Resorts an advantageous position compared to peers in the gaming and lodging industry. In order to boost performance in Las Vegas, the company has remodeled rooms at its properties and have initiated several traffic driving initiatives. Additionally, in the highly competitive operating space of Las Vegas, the company offers various promotional allowances to retain its market share. By distributing higher incentives to gambling patrons and providing a robust return, Wynn Resorts is slated for strong growth.
Arguably, earnings growth is of utmost importance for determining a stock’s potential as surging profit levels are often indicative of strong prospects (and stock price gains). For the current year, Wynn Resorts’ earnings per share are expected to grow 57.4%, higher than the industry’s 2.9% growth. Moreover, year-over-year sales growth for the current year is expected at 37.9%.
Return on Equity (ROE): Wynn Resorts delivered a ROE of nearly 133% in the trailing 12 months, compared with the industry’s gain of 7.1%. This shows that the company reinvests more efficiently compared to peers.
Industry Backdrop: Being a leading developer, owner and operator of casino resorts, part of Wynn Resorts’ revenues is influenced by the global games market scenario. Per a recent press release, the Global Online Gambling Market has huge growth potential. The market valued $44.16 billion in 2016 and is estimated to reach $ 81.71 billion by 2022, at a compound annual growth rate (CAGR) of 10.8%. Moreover, according to the Global Games Market Report by Newzoo, the overall growth rate in the gaming industry is improving. In 2017, 2.2 billion gamers across the globe are expected to generate $108.9 billion, reflecting 7.8% year-over-year growth.
Additionally, backed by the optimism surrounding improving tourism in Las Vegas and increasing visitation pattern, revenues of Wynn Resorts are likely to grow.
Focus on Non-Gaming Revenues: Wynn Resorts generates a solid share of its revenues from Macau resorts. Apart from the gaming business in Macau, the company has been increasingly focusing on boosting non-gaming revenues. Given the infrastructure development and tourism boost in Macau, non-gaming sources are expected to boost revenues for the company.
Zacks Rank and Other Stocks to Consider
Wynn Resorts currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other top-ranked stocks in the industry are Churchill Downs Incorporated CHDN, The Stars Group Inc. TSG and Paddy Power Betfair plc PDYPY, all carrying a Zacks Rank #2 (Buy).
Current-year earnings for Churchill Downs are expected to increase 29.3%.
Stars Group’s current-year earnings are estimated to rise 20.7%.
Paddy Power’s current-year earnings are expected to grow 28.5%.
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