The stock of casino operator Wynn Resorts (NASDAQ: WYNN) recorded a 12-month high of $104.39 on January 30th. The upswing was mainly due to the announcement of fiscal 2016 fourth-quarter revenue that beat analysts’ estimates. However, the company failed to meet the earnings estimate of analysts. Thus, the stock was unable to consolidate above $100 and has declined to $97.18 as of yesterday’s close. The analysis below explains why we anticipate further downside in the share price of Wynn Resorts.
The Las Vegas-based company reported an increase in the fourth-quarter 2016 revenues to $1.30 billion, from $946.90 million in the corresponding quarter last year, and higher than Wall Street estimates of $1.25 billion. For 4Q16, the net income was $113.80 million, or $1.12 per share, compared with $87.22 million, or $0.86 per share, in 4Q15.
Excluding property charges and loss on extinguishment of debt, among other charges, the adjusted net income attributable to Wynn Resorts declined to $51 million in the quarter ended December 2016, from $104.08 million in the quarter ended December 2015. On a per-share basis, the adjusted income declined to $0.50 per share in the latest quarter, from $1.03 per share in the same period last year. Zacks analysts’ anticipated earnings of $0.67 per share for the quarter.
The recently opened Wynn Palace accounted for a 37.3% increase in overall revenues of the company in the fourth quarter. However, it was offset by a decline in revenues from Wynn Macau and Las Vegas resorts.
Wynn Macau revenues plunged 10.3% y-o-y to $498.4 million. In particular, casino revenues from Macau operations fell 10.7% to $465.3 million. Revenues from Las Vegas operations decreased 2% to $383.3 million. The casino revenues fell 2.8% to $166 million. During the fourth-quarter, Wynn Palace recorded revenues of $418.7 million, which includes $373.2 million from casino operations.
Wynn Resorts also reported a 46.1% increase in the total operating costs and expenses to $1.16 billion, mainly due to a rise in expenses related to food and beverage, entertainment, and administrative expenses. Thus, considering the weak performance, we do not anticipate any reversal in the stock’s fortunes as of now.
The stock trades below the short-term resistance at 97.50. The descending slope of the stochastic oscillator confirms the underlying weakness in the stock. So, a downtrend in the stock of Wynn Resorts can be anticipated.
To capitalize on the fall in the share price, a trader can invest in a low contract offered by any of the reputed binary brokers. The trade can be entered when the stock trades near $97 in the cash market. To gain maximum advantage from the setup, a trader should ideally choose a day in the third week of February for the expiry of the contract.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
