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Hello. As the Editor of The Money Journal (, I have devoted a lifetime to the study of stock, financial markets, investing, and successful money management. I invite you to read my articles and posts, and I hope that you enjoy the advice, guidance and inside secrets that I share.
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  • Why Wynn Won't Win 0 comments
    Aug 13, 2013 11:20 PM | about stocks: WYNN, WYNMF

    Recently, a Goldman Sachs strategist identified what he thinks are the most undervalued stocks. One of those, to my surprise, was Wynn Resorts (NASDAQ:WYNN).

    Forget the fact that it's trading near its 52-week high (144.99)... or that they have over $7 billion in debt... or that the company reported 2nd qtr 2013 earnings of $1.51 per share on 7/29/13. This missed the $1.57 consensus of the 24 analysts covering the company.

    The really frightening news is that the company is excitedly pumping $4 billion into building a new property in Macau. That's right, $4 billion. And that's right, Macau.

    Wynn already has a property in Macau, and it did about $300 million in business last year.

    By my rough calculations, if the new property does the same numbers (which is a big unknown), it will take over 13 years just to break even.

    So here's a question for any reader to ponder: Assuming you had the cash, would you invest $4 billion to earn $300 million a year?

    No, neither would I. But in the Wynn's case, the matter is more serious because that $4 billion isn't their money... it's borrowed. So it has to be paid back, presumably with interest. And if their only earning less 8% on their investment, and they have this enormous debt, plus operating expenses, how do they intend to actually make money?

    From where I'm sitting, this looks not like a winner, but like a loser.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: WYNN, WYNMF
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