Wynn, Casinos Freefall Continues

With a world-wide economic recession continuing, the major casino operators in both Las Vegas and Macau, China are seeing slowing traffic and decreasing profits. The stocks of casino operators Wynn Resorts (WYNN), Las Vegas Sands (LVS), and MGM Mirage (MGM) all fell Friday. MGM fell 1.5% midway through the afternoon with Las Vegas Sands falling 14% and Wynn Resorts tumbling 8%.

Analyst Lowers Targets

Dennis Frost of KeyBanc Capital Markets lowered targets for Wynn Resorts on Wednesday including the company's first quarter profit estimate, second, third, fourth, and full year estimates. He also lowered the price target for the stock from $18 a share down to $13 a share. Earnings estimates were decreased from 17 cents a share in the first quarter down to 6 cents a share. Second quarter earnings per share estimates were cut from 33 cents to 27 cents.

Fundamentals

The company missed its fourth quarter 2008 estimate by 84%, earning only 7 cents a share. Earnings growth is estimated to be falling at 82% for the year while revenues will hopefully increase 2%. The forward price/earnings ratio remains at 18 even after the stock reaches a new 52 week low daily. Most operators are cutting jobs, canceling or suspending projects, and reducing costs to regain profitability. In this tough environment, Wynn Resorts will continue to struggle.

Wynn Resorts
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Comments

[investor88:]

All three casino stocks are doing poorly. Some say Wynn is the best of the casino companies, bears watching when the economy recovers. Interesting to note foreward pe is 18x for Wynn, its not cheap under current economic conditions.

Las Vegas Sands is relying a lot on new Casino in Singapore and Bethlehem expected to open next year. Have to see how these new investments perform before buying this stock.

Mar 06 07:43 PM

[hpcooperjon:]

don't believe it for a second!


On Mar 07 11:51 AM Richard Collins; Claremont, CA wrote:

> Now is the time to buy the Big 4, LVS, MGM, WYNN and BYD.
> Why wait until they go up 100 points and listen to Cramer tell you
> to buy,buy,buy. At that time you will make 20%, but miss the biggest
> part of the bull market.
> Accumulate shares when your downside is limited and the upside is
> unlimited. These companies are very strong and there is no risk if
> you have the patience.
>
> Daniel Kowkabany

Mar 07 02:53 PM

[Richard Col...:]

hpcooperjon -

Show me the facts where I'm wrong. I'm always willing to listen. Explain how Vegas and Macau are going under and the Big 4 casinos are going under and everybody is going to the beach and mountain climbing or spend $500. to see a Laker game and after the game find their car vandalized. I might add the Asians enjoy gambling even more than Americans.

Las Vegas will be here and thriving long after you and I are gone, especially in Macau where the 21st century belongs to China.

7 come 11

Dan Kowkabany

Mar 07 07:45 PM

[User 371806:]

Winter break 2000 when I was still in college I visted Vegas for the first time. I loved it enough to make 7 trips back.

In 2000 Vegas was the nation's 63rd. biggest metro area. By 2008 it has climbed to the 32nd. biggest metro area in the country.

For BYD (Boyd Gaming) the locals market accounts for about half of their business. Even in the reccession the Vegas metro area's population continues to grow. If BYD can make it out of the recession before the banks take their properties they could really pay! If you want to gamble on a cheap stock take a look. But, you could also take your money to the roulette wheel at one of their casinos and put it on red or black and have a 48% chance of doubling your money.

Mar 07 10:58 PM

[XRTrader:]

Re MGM and LVS, these stocks are currently a play on the credit market; if credit loosens enough for these companies to refi debt, they (i.e. the common stock) will survive long enough to profit from the vegas recovery. Meanwhile, i agree with some of the posts above that if/when the credit issues work out in their favor, these stocks will be back in the low double digits.

Meanwhile, it's also interesting that both these company's futures depend largely on what their majority holders (adelson and krekorian) will do. Looking into their finances provides some interesting info on how long/if they can/will provide these companies credit.

disclosure: long MGM and LVS calls 2011

Mar 09 03:31 PM

[The A man:]

I was just in Vegas and was astonished at how many people there still were spending money on a Tuesday and Wednesday night.

MGM Mirage is definitely in a cash crunch from City Centre but it is a huge wealth generator. It is currently paying for most of City Center out of operating cash flows and lines. They have sold Treasure Island which will provide some cash and they have hired a firm to work with them to find new cash and rearrange their finances.

The road ahead is unknown except that this is a very strong high demand wonderland for adults. If they can survive this they will
emerge on the other side with their house in tact anyone owning shares will do well.

I'm looking at a 10,000 share block purchase. Seems like everything is right eccept the economy. Survival is a game for all major casino's right now.

Trumps in & out of Bankruptcy has shown that the banks do not want to own any of this. They just wanted to finance it before the down turn and now don't even want to do that. Seems right to buy.... just thinking that this will go painfully on until late May of this year.

When to buy...is the key to all of this at 1.90 + or - or wait until it hits $ 1.60 or
$ 1.20 Hmmmm!!!!!


On Mar 07 02:53 PM hpcooperjon wrote:

> don't believe it for a second!

Mar 11 09:03 PM

[The A man:]

Revenues are down! Below carrying costs.
I've run a small company for years, how much money can they borrow or float?
Construction costs added in and this is a new game. Believe as I do; & I do believe that these Casino's will survie; it is really a matter of when to buy. The Sands went up and down and up and then straight down. Anyone heard the fat lady sing?

Mar 11 09:08 PM