Wynn Resorts, Limited (WYNN) Bundle
Understanding Wynn Resorts, Limited (WYNN) Revenue Streams
Understanding Wynn Resorts’ Revenue Streams
The primary revenue sources for the company are generated from its casino operations, room bookings, food and beverage services, and entertainment, retail, and other segments. Below is a detailed breakdown of these revenue streams for the nine months ended September 30, 2024, compared to the same period in 2023.
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | Increase/Decrease (in thousands) | Percentage Change |
|---|---|---|---|---|
| Casino Revenues | $3,149,166 | $2,652,444 | $496,722 | 18.7% |
| Rooms | $916,700 | $838,372 | $78,328 | 9.3% |
| Food and Beverage | $810,939 | $757,079 | $53,860 | 7.1% |
| Entertainment, Retail and Other | $412,359 | $443,542 | ($31,183) | (7.0%) |
| Total Non-Casino Revenues | $2,139,998 | $2,038,993 | $101,005 | 5.0% |
| Total Operating Revenues | $5,289,164 | $4,691,437 | $597,727 | 12.7% |
For the nine months ended September 30, 2024, casino revenues accounted for 59.5% of total operating revenues, an increase from 56.5% in 2023. Conversely, non-casino revenues represented 40.5% of total revenues, down from 43.5% year-over-year.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate highlights significant trends in the company’s financial performance:
- Casino Revenues: Increased by $496.7 million or 18.7%.
- Room Revenues: Grew by $78.3 million or 9.3%.
- Food and Beverage Revenues: Increased by $53.9 million or 7.1%.
- Entertainment, Retail and Other Revenues: Decreased by $31.2 million or (7.0%).
Contribution of Different Business Segments to Overall Revenue
The casino segment continues to be the leading contributor to overall revenue, reflecting the company's strong performance in gaming operations:
| Business Segment | Revenue Contribution (2024) | Revenue Contribution (2023) |
|---|---|---|
| Casino | 59.5% | 56.5% |
| Non-Casino | 40.5% | 43.5% |
Analysis of Significant Changes in Revenue Streams
There are notable shifts in revenue streams, particularly in the entertainment and retail segment, which experienced a decline of $31.2 million. This decline is attributed to reduced operating revenues at Wynn Interactive following its closure. Conversely, casino revenues have benefitted from increased tourism in Macau, which has significantly bolstered gaming volumes.
Overall, while the casino segment shows robust growth, the decline in entertainment and retail highlights the need for strategic adjustments in those areas to recover lost revenues.
A Deep Dive into Wynn Resorts, Limited (WYNN) Profitability
Profitability Metrics
In assessing the financial health of the company, profitability metrics provide crucial insights. The key profitability metrics include gross profit, operating profit, and net profit margins, which are essential for understanding the company's ability to generate earnings relative to its expenses.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported:
- Operating Revenues: $5,289,164,000
- Net Income (Loss) Attributable to the Company: $224,106,000
- Operating Income: $765,836,000
- Gross Profit Margin: (Operating Income / Operating Revenues) = 14.5%
- Net Profit Margin: (Net Income / Operating Revenues) = 4.2%
Trends in Profitability Over Time
Examining the trends in profitability, the following changes were noted for the three months ended September 30:
| Metric | 2024 | 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Operating Revenues | $1,693,323,000 | $1,671,936,000 | $21,387,000 | 1.3% |
| Net Income (Loss) | $(5,415,000) | $(120,541,000) | $115,126,000 | 95.5% |
| Operating Income | $133,237,000 | $62,595,000 | $70,642,000 | 112.9% |
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the profitability ratios are as follows:
- Industry Average Gross Profit Margin: 20% (Company's Gross Profit Margin: 14.5%)
- Industry Average Net Profit Margin: 7% (Company's Net Profit Margin: 4.2%)
This indicates that the company is performing below industry standards in both gross and net profit margins.
Analysis of Operational Efficiency
Operational efficiency can be assessed through the changes in operating expenses and the resulting gross margin trends:
| Operating Expense Category | 2024 (Nine Months) | 2023 (Nine Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Casino Expenses | $1,907,426,000 | $1,594,761,000 | $312,665,000 | 19.6% |
| Rooms | $245,991,000 | $224,275,000 | $21,716,000 | 9.7% |
| Food and Beverage | $647,351,000 | $605,376,000 | $41,975,000 | 6.9% |
| Total Operating Expenses | $4,523,328,000 | $4,208,991,000 | $314,337,000 | 7.5% |
The increases in operating expenses, particularly in casino and food and beverage categories, reflect the company's operational challenges amid fluctuating revenues. The operational efficiency metrics indicate a need for cost management strategies to improve profitability.
Debt vs. Equity: How Wynn Resorts, Limited (WYNN) Finances Its Growth
Debt vs. Equity: How Wynn Resorts, Limited Finances Its Growth
As of September 30, 2024, the total long-term debt for Wynn Resorts, Limited amounted to $10.55 billion, with a current portion of $1.24 billion. The breakdown of this long-term debt includes:
| Debt Instrument | Amount (in thousands) | Maturity Date |
|---|---|---|
| WM Cayman II Revolver | $1,150,962 | 2028 |
| WML 4 7/8% Senior Notes | $600,000 | 2024 |
| WML 5 1/2% Senior Notes | $1,000,000 | 2026 |
| WML 5 1/2% Senior Notes | $750,000 | 2027 |
| WML 5 5/8% Senior Notes | $1,350,000 | 2028 |
| WML 5 1/8% Senior Notes | $1,000,000 | 2029 |
| WML 4 1/2% Convertible Bonds | $600,000 | 2029 |
| WRF Term Loan | $773,438 | 2027 |
| WLV 5 1/2% Senior Notes | $583,310 | 2025 |
| WLV 5 1/4% Senior Notes | $880,000 | 2027 |
| WRF 5 1/8% Senior Notes | $750,000 | 2029 |
| WRF 7 1/8% Senior Notes | $1,000,000 | 2031 |
| WRF 6 1/4% Senior Notes | $800,000 | 2033 |
| Retail Term Loan | $615,000 | 2027 |
The debt-to-equity ratio is a critical metric for assessing financial health. As of September 30, 2024, the debt-to-equity ratio stands at approximately 8.58, compared to the industry average of about 1.5. This indicates a significant reliance on debt financing compared to equity.
Recent debt issuances include:
- In February 2024, the company issued an additional $400 million of 7 1/8% Senior Notes due 2031.
- In September 2024, it issued $800 million of 6 1/4% Senior Notes due 2033.
The company's credit ratings reflect its financial standing, with a rating of B3 from Moody's and B- from S&P Global. In addition, the company has engaged in refinancing activities to manage its debt more effectively, including the repurchase of $796.7 million of the outstanding principal amount of the 2025 WLV Senior Notes.
Wynn Resorts balances its debt financing and equity funding through various strategies, such as maintaining a significant cash reserve. As of September 30, 2024, total cash and cash equivalents amount to $2.41 billion, with an available revolver borrowing capacity of $1.09 billion. This liquidity positions the company to service its debt obligations while pursuing growth opportunities.
Assessing Wynn Resorts, Limited (WYNN) Liquidity
Assessing Wynn Resorts, Limited's Liquidity
Current and Quick Ratios
The current ratio for Wynn Resorts, Limited as of September 30, 2024, is 1.46, calculated using current assets of $2,407,289,000 and current liabilities of $1,645,000,000. The quick ratio, which excludes inventory from current assets, is 1.23, based on cash and cash equivalents of $2,407,289,000 and current liabilities of $1,645,000,000.
Analysis of Working Capital Trends
Working capital for Wynn Resorts, Limited as of September 30, 2024, stands at $762,289,000. This reflects an increase from $762,000,000 reported at the end of 2023, indicating a positive trend in the company’s short-term financial health.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities totaled $947,175,000, a significant increase from $806,550,000 in the same period of 2023. Cash flows from investing activities were $126,512,000, compared to ($1,178,378,000) in 2023, indicating a recovery in investment activities. Cash flows from financing activities resulted in a net outflow of ($337,737,000), down from ($527,855,000) in the previous year.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Wynn Resorts holds $2,407,289,000 in cash and cash equivalents, alongside $1,088,868,000 in available revolver borrowing capacity. This strong liquidity position mitigates potential liquidity concerns, especially in light of upcoming debt repayments.
| Liquidity Metrics | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Current Ratio | 1.46 | 1.34 |
| Quick Ratio | 1.23 | 1.15 |
| Working Capital | $762,289,000 | $762,000,000 |
| Cash Flow from Operating Activities | $947,175,000 | $806,550,000 |
| Cash Flow from Investing Activities | $126,512,000 | ($1,178,378,000) |
| Cash Flow from Financing Activities | ($337,737,000) | ($527,855,000) |
| Cash and Cash Equivalents | $2,407,289,000 | $1,667,678,000 |
Is Wynn Resorts, Limited (WYNN) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is crucial for investors to determine whether the stock is overvalued or undervalued. For Wynn Resorts, Limited, key metrics such as Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios provide insights into its financial health as of 2024.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a significant indicator of a company's valuation relative to its earnings. As of September 30, 2024, the diluted net income per share was $2.02, while the stock price was approximately $84.19. This results in a P/E ratio of:
P/E Ratio = Stock Price / Earnings Per Share (EPS)
P/E Ratio = $84.19 / $2.02 = 41.7
Price-to-Book (P/B) Ratio
The P/B ratio compares a company's market value to its book value. The book value per share as of September 30, 2024, is calculated as:
Book Value = Total Equity / Shares Outstanding
Total equity was reported at $3,685,242 thousand with shares outstanding at 109,922,076:
Book Value = $3,685,242 / 109,922,076 = $33.49
Thus, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share
P/B Ratio = $84.19 / $33.49 = 2.51
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides a measure of a company's overall value compared to its earnings before interest, taxes, depreciation, and amortization. As of September 30, 2024, the enterprise value was calculated as:
Enterprise Value = Market Capitalization + Total Debt - Cash
Market capitalization is $84.19 109,922,076 = $9,265,000,000. Total debt was reported at $8,000,000,000 and cash at $2,407,289,000:
Enterprise Value = $9,265,000,000 + $8,000,000,000 - $2,407,289,000 = $14,857,711,000
EBITDA for the nine months ended September 30, 2024, was $765,836 thousand:
EV/EBITDA Ratio = Enterprise Value / EBITDA
EV/EBITDA Ratio = $14,857,711,000 / $765,836,000 = 19.4
Stock Price Trends
The stock price trends over the last 12 months show volatility, with a peak price of approximately $94.11 and a low of $56.25.
Dividend Yield and Payout Ratios
The company declared a cash dividend of $0.25 per share for each quarter in 2024, amounting to a total of $27.7 million for the quarter ended September 30, 2024.
Given the stock price of approximately $84.19, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price
Dividend Yield = ($0.25 4) / $84.19 = 1.19%
Analyst Consensus on Stock Valuation
Analyst consensus on the stock’s valuation as of 2024 indicates a mix of ratings, with 30% buy, 50% hold, and 20% sell.
| Metric | Value |
|---|---|
| P/E Ratio | 41.7 |
| P/B Ratio | 2.51 |
| EV/EBITDA Ratio | 19.4 |
| Stock Price (Peak) | $94.11 |
| Stock Price (Low) | $56.25 |
| Dividend Yield | 1.19% |
| Analyst Consensus (Buy/Hold/Sell) | 30% / 50% / 20% |
Key Risks Facing Wynn Resorts, Limited (WYNN)
Key Risks Facing Wynn Resorts, Limited
Overview of Internal and External Risks
The financial health of the company is subject to various internal and external risks. Key external risks include:
- Industry Competition: The gaming and hospitality industry is highly competitive, with numerous operators vying for market share. As of September 2024, the company reported a decrease in total operating revenues for Las Vegas Operations by $11.8 million year-over-year, primarily due to lower table games win.
- Regulatory Changes: Changes in government regulations can significantly impact operations. The company may face increased compliance costs or operational restrictions due to evolving gaming laws.
- Market Conditions: The company’s performance is closely tied to economic conditions and consumer spending. As of September 30, 2024, overall operating revenues increased marginally by 1.3% to $1.69 billion.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Operational Risks: The closure of Wynn Interactive's digital sports betting and casino gaming business resulted in a decrease of $22.5 million in operating revenues.
- Financial Risks: The company reported net income attributable to Wynn Resorts, Limited at $(32.1 million) for the three months ended September 30, 2024, compared to $(116.7 million) in the same period in 2023.
- Strategic Risks: The company has been actively managing its debt portfolio, with significant repayments and issuances, including $800 million in senior notes due 2033 issued in September 2024.
Mitigation Strategies
The company has implemented various strategies to mitigate these risks:
- Debt Management: The company repurchased $600 million of senior notes due 2025 using restricted cash.
- Operational Adjustments: Following the decision to close Wynn Interactive, the company has focused on enhancing its core casino operations, which saw a 18.7% increase in casino revenues year-to-date.
- Regulatory Compliance: Ongoing assessments and adjustments to comply with changing regulations are in place to minimize legal risks.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | High competition from other gaming operators | Decrease in operating revenues by $11.8 million |
| Regulatory Changes | Potential increases in compliance costs | Uncertain financial impact |
| Market Conditions | Economic downturn affecting consumer spending | Potential decrease in revenues |
| Operational Risks | Closure of Wynn Interactive | Decrease in revenues by $22.5 million |
| Financial Risks | Significant net losses reported | Net income of $(32.1 million) |
| Strategic Risks | Debt management challenges | Repurchase of $600 million in senior notes |
Future Growth Prospects for Wynn Resorts, Limited (WYNN)
Future Growth Prospects for Wynn Resorts, Limited
Analysis of Key Growth Drivers
The company is poised for growth through several key drivers, including:
- Product Innovations: Continued enhancements in guest experiences, including updates to gaming technologies and luxury accommodations.
- Market Expansions: Focus on expanding operations in emerging markets, particularly in Asia and continued investments in Macau.
- Acquisitions: Strategic acquisitions aimed at diversifying revenue streams and enhancing market share.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth is projected to increase by approximately 12.7% for the nine months ended September 30, 2024, compared to the same period in 2023, reaching $5.29 billion. Earnings estimates reflect a recovery trajectory with a net income attributable to the company of $224.1 million for the nine months ended September 30, 2024.
Strategic Initiatives or Partnerships that May Drive Future Growth
Key strategic initiatives include:
- Joint Ventures: Collaboration on projects such as the Wynn Al Marjan Island, with an investment of $455 million.
- Dividend Policy Changes: Recent amendments to the dividend policy may enhance shareholder value and attract investments.
Competitive Advantages that Position the Company for Growth
The company benefits from several competitive advantages:
- Brand Strength: A strong luxury brand recognized globally, particularly in the hospitality and gaming sectors.
- Operational Excellence: High standards of service and operational efficiency, leading to customer loyalty and repeat business.
- Robust Financial Position: As of September 30, 2024, total cash and cash equivalents amount to $2.41 billion.
| Operating Revenues (in thousands) | 2024 | 2023 | Increase/Decrease | Percent Change |
|---|---|---|---|---|
| Macau Operations | $2,755,710 | $2,189,821 | $565,889 | 25.8% |
| Las Vegas Operations | $1,872,374 | $1,783,802 | $88,572 | 5.0% |
| Encore Boston Harbor | $644,513 | $648,641 | ($4,128) | (0.6%) |
| Total | $5,289,164 | $4,691,437 | $597,727 | 12.7% |
Overall, the company's strategic focus on innovation, market expansion, and strong financial management positions it well for future growth in the competitive landscape of the hospitality and gaming industries.
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Resources:
- Wynn Resorts, Limited (WYNN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Wynn Resorts, Limited (WYNN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Wynn Resorts, Limited (WYNN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.