Wynn Resorts, Limited (WYNN) operates luxury hotel and destination casino resorts in Las Vegas and Macau. In my view, WYNN is the best of breed in its sector, and with a 5 year growth rate of 32.36% and multiple growth drivers in place, this stock should be bought and held. Friday, 2/8/2013, WYNN closed at $126.52, up $3.69.
WYNN is also ideal for traders because of its high volatility (Beta 1.60), and its tendency to make runs up or down that can last for many days. When it does make a run to the south, it's more prudent to consider it a buying opportunity than a short! By catching this behemoth at the right time, traders can be richly rewarded. For those who patronize stock options, WYNN, as you would expect, offers some great opportunities since its options are high in premium values and liquidity.
The Company owns and operates three casino/hotel properties: Wynn Las Vegas, Encore, and Wynn Macau. Steve Wynn, founder, Chairman and CEO of WYNN meticulously designed these properties in accordance with his formula for success: Provide customers with an extraordinary "larger than life" premium experience by integrating luxurious surroundings with distinctive entertainment, superior amenities, world class fine dining, upscale retail offerings, and the greatest casinos in the world.
The Las Vegas operations (Wynn Las Vegas and Encore) feature two luxury hotel towers with a total of 4,750 hotel rooms, suites and villas and 183,000 square feet of casino space. The repertoire of high end retailers at these properties is a "happening", and includes Alexander McQueen, Brioni, Cartier, Chanel, Dior, Graff, Hermès, Louis Vuitton, Oscar de la Renta and even Ferrari and Maserati dealerships.
The Macau resort is located in the Macau Special Administrative Region of the People's Republic of China. (WYNN received a gambling concession from the government in 2002, and there's no limit to the number of casinos it's permitted to operate, but each facility is subject to government approval.)
The Macau resort features two luxury hotel towers with a total of 1,008 rooms and approximately 265,000 square feet of casino space. In accordance with the Steve Wynn design formula, it features eight restaurants, approximately 54,600 square feet of retail space, plus luxurious recreation and leisure facilities, including two health clubs, spas, and swimming pools.
Positive Recent Events - An End to the WYNN/ Kazuo Okada Controversy
The on-going feud between WYNN, Steve Wynn, and his former partner and Board Member, Kazuo Okada has ended in favor of WYNN. The controversy was initially hatched based upon Okada's decision to pursue a casino/hotel development in the Philipppines on his own, thereby making him a direct competitor of WYNN.
The controversy dramatically grew and included WYNN's redemption of Okada's 20% stake in WYNN in February, 2011 at a 30 percent discount ($800 million) to its then market price. Incredibly, the $800 million is payable through a 10 year note. Clearly, this maneuver was a boon for WYNN and its shareholders, and demonstrates the foresight and business acumen of Steve Wynn.
In recent days, the Company issued press releases regarding this matter which included the following points which ends the Okada controversy:
√ The dismissal by Federal Courts of Okada's allegations in a shareholder derivative action
√ The conclusion by Nevada Gaming Regulators that Okada's allegations against WYNN regarding its donations to The University of Macau were unfounded.
√ The issuance of a report by Institutional Shareholder Services Inc. (ISS), a leading proxy advisory firm, recommending that shareholders of WYNN vote to remove Okada from the Board of Directors.
Future Drivers of Growth
√ The Wynn Cotai Casino/Hotel is scheduled to open Chinese New Year, 2016
When completed, the $4.00 billion Wynn Cotai will more than double WYNN's hotel room and casino footprints in Macau. (The Cotai Strip is a major land reclamation project in Macau, a special administrative region of the People's Republic of China. The land reclamation project includes joining the two islands of Coloane and Taipa.)
√ New opportunities are arising in the US from states approving gambling venues to increase revenues in the face of rising deficits
With respect to casino opportunities that will most assuredly develop in numerous states, Steve Wynn, in a recent interview, confirmed that he's looking into major metropolitan casino sites for future operations, and especially in Pennsylvania and Massachusetts.
√ Recovery of the US economy and in China will spur travel and gambling growth
√ Continued growth of land casino gambling is projected well into the future
Global Industry Analysts (GIA) has a reputation as being one of the world's largest market research publishers The study by GIA predicts that the global market for land casino gambling will reach $101.30 billion by 2015.
√ The prospects & potential of on-line gambling
Wynn Resorts has applied for an online poker license in the state of Nevada this week, possibly signaling its entry into the real money poker arena. Wynn had entered into a partnership with PokerStars (a leading online Poker company) just weeks before that company was indicted by the US Justice Department last year. It immediately pulled out of that arrangement.
Wynn is widely believed to be in talks with Zynga (ZNGA) to deliver the "real cash" online poker platform, and Zynga itself has not applied for a license in Nevada. AS the world's largest social gaming developer, Zynga could give WYNN access to Zynga's global customer base.
Two companies, Bally Technologies and International Gaming Technologies, were granted licenses by the Nevada Gaming Board last week.
Wynn Significant Metrics
|Closing Price 2/8/2013||$126.52|
|Annual Dividend Per Share||$1.00|
|Next Ex-Dividend Date||02/12/13|
|52 Week High||$138.28|
|52 Week Low||$90.10|
|5 Year Growth Rate||32.36%|
|Current Year Est. EPS||$6.04|
|Next Year Est. EPS||$6.75|
|Compiled by Craig Van Pelt|
Comparative Growth Rates
|DESCRIPTION||LAST 5 YRS||FY 2013||FY 2014||NEXT 5 YRS|
For all of the reasons stated above, WYNN should return significant returns to shareholders over the next several years, and beyond. The global growth in its sector is not expected to abate, and WYNN will continue to rack up market share because of its leadership role in the sector. In the short term, WYNN did pull back a bit from its high of $126.98 to $120.77 during the first days of February on the news that the Chinese government would crackdown on junkets because of their alleged ties to organized crime. However, and as can be seen from Friday's price action, it has recovered. Considering Friday's upward move of 3% to $126.52, investors may want to wait for another pullback before jumping on board.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.