Wynn Resorts Faces Challenges as EPS and Revenue Fall Short

Wynn Resorts struggles with disappointing Q3 earnings and underperformance relative to the S&P 500. Analysts, however, maintain a ‘Strong Buy’ consensus, predicting substantial upside potential for the stock.

Date: 31-12-2024

AI Rating: 5

Overview of Earnings and Performance
Wynn Resorts recently faced challenges with its Q3 earnings, reporting revenues of $1.69 billion, which reflected only a 1.3% year-over-year growth. This figure fell short by 2% against analyst forecasts. The company also reported an adjusted EPS of $0.90, significantly missing the expected $1.10.

Margins and EBITDA Analysis
The financial performance showed fluctuating margins, where the gross margin sharply decreased to 42.3% from 67.5% a year ago. In contrast, the operating margin improved to 7.9% from 3.7%. However, the EBITDA margin contracted to 17.2% from 26.5% during the same period. The substantial decline in gross margin could be a concern for investors while the improvements in operating margin present a mixed signal.

Market Trends and Stock Performance
WYNN shares have exhibited a bearish trend, trading significantly below its moving averages for an extended period. The stock has dropped 2.2% over the year, lagging behind the S&P 500's impressive growth of 24.8%. Furthermore, a significant decline of 9.2% over the last three months could influence investor sentiment negatively.

Despite this, the consensus among analysts remains positive, as indicated by the 'Strong Buy' rating from 15 analysts and a mean price target suggesting a 29.3% upside potential. This positive outlook reflects confidence in the company's ability to recover and grow in the luxury hospitality and gaming sector.

Stocks: WYNN LVS