Wynn Resorts, Limited (WYNN) Earnings: Macau Results Fall Behind Competitors

The earnings reports from Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts, Limited (NASDAQ:WYNN) over the last two days couldn’t have been any more different. Sands had a great quarter in Macau, growing revenue and EBITDA well ahead of the Macau market’s overall pace; Wynn lost a lot of ground in Macau. Wynn had an outstanding quarter in Las Vegas; Sands dropped like a rock.

For both companies, the Macau market accounts for more of their revenue and earnings, so the quarter’s win goes to Las Vegas Sands, no questions. Let’s take a closer look at the results.

Wynn Resorts, Limited (NASDAQ:WYNN)Digging into the numbers
In yesterday’s review of Las Vegas Sands’ results, I covered the EBITDA growth of the company’s casinos, pointing out that Cotai is continuing to steal share. The narrative continued today because Wynn saw a 9.7% decline in revenue and a 9.5% decline in EBITDA to $283.2 million.

I don’t expect this general trend to reverse anytime soon, and I expect to see somewhat negative Macau results from MGM Resorts International (NYSE:MGM) and similar positive results from Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) .

To take a fundamental look at where gaming play is headed, I’ve listed below the VIP (rolling chip) level of play and the mass market level of play at the three most established and profitable casinos Wynn and Las Vegas Sands own. Companies report numbers slightly differently, so don’t pay attention to the absolute number; instead focus on the change year over year. These numbers also take luck out of the equation, something that can skew EBITDA numbers quarter to quarter.

Casino Rolling Chip Drop YOY Change Mass Market Drop YOY Change
The Venetian Macau $12.7 billion (6.6%) $1.2 billion 10.5%
Wynn Macau $27.7 billion (6.6%) $699.3 million (1.0%)
Sands Macau $5.8 billion (24.2%) $708.6 million 3.1%

Source: Company earnings releases.

What we see are two things: Mass market is clearly stronger than VIP play right now, and Cotai is where gaming is headed, particularly for mass play.

The table above shows why Las Vegas Sands is outperforming Wynn and likely the other players on the Macau Peninsula right now.

Growth opportunities
On the conference call, CEO Steve Wynn talked a lot about expanding the company, not only in Macau, but also urban developments in places like Boston and Philadelphia. More U.S. development doesn’t excite me given the massive competition, and until the company announces something concrete, it’s hard to evaluate an opportunity.

In Macau, Wynn is spending as much as $4 billion on a resort that will be completed in three years. This will open about the time that Las Vegas Sands opens The Parisian and MGM Resorts opens a new resort.

What happens in Vegas
The interesting part of today’s report, and what has kept the stock out of free fall, is very good numbers in Las Vegas. Revenue was up 12.1% in the quarter to $390.4 million and EBITDA was up 29.4% to $115.3 million.

Better-than-expected win percentage helped results, but so did a 14.3% jump in table game play and a 14.9% jump in slot play. This compares to a 13.7% drop in table play at Las Vegas Sands’ strip resorts and a 0.7% decline in slot play.

MGM Resorts and Caesars Entertainment Corp (NASDAQ:CZR) both have a lot riding on Las Vegas, which has recovered slowly in 2012, and it will be interesting to see what they report. Both room revenue and food and beverage was mixed for the two companies that have reported, and they don’t give a lot of indication of what MGM or Caesars will report.

Foolish bottom line
The results for Wynn out of Macau are disappointing, and I don’t expect them to markedly improve until 2016 when the company’s new Cotai resort is complete. Until then, I think flat revenue and EBITDA for Wynn as a whole would be a reasonable expectation, along the lines with what the past year has been. For long-term investors, the thesis is that the Cotai resort can double both revenue and EBITDA for the whole company and that’s worth hanging on for.

In the near term, Las Vegas Sands will continue to take share because of growth on Cotai, and so will Melco Crown.

The article Wynn Earnings: Macau Results Fall Behind Competitors originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!