Wynn Resorts Limited, Research Paper Example

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Research Paper

Executive Summary

Wynn Resorts Limited is a successful company in the leisure sector, targeting high profile clients and businesspeople. With flourishing branches in Las Vegas and Macau, growth has increased along with revenues over the past few years. Employee and customer loyalty has also increased, and dedication to all stakeholders remains a top priority.

Shareholder growth and financial performance has been an indicator of this success, with high stock prices and volumes of stock at all-time highs. Past performance has become an indicator of future performance; and Wynn Resorts Limited has experienced significant financial performance, especially in the past twenty-four month period.

One of the ways that Wynn Resorts Limited maintains positive financial performance is its strategy. As a majority of the company’s stock is held by employees, it is able to function on the market, as it does, without suffering huge losses; this is also due to the nature of the business.

However, from an investor’s point of view, recent events on an international scale have put the financial health of the company in jeopardy. Corporate lawsuits and neither positive, nor negative, ratings from operators on the stock exchange and business analysts have prompted decreases in stock prices, pointing to internal failures to maintain company performance. As a result, the future of Wynn Resorts Limited is blurred, and thus the recommendation has been a “don’t buy”. This is from a recent financial position and is to be taken in the best interests of potential investors.

Company Profile

*Ticker Symbol

Traded under the ticker symbol ‘WYNN’, stock of the company is held by various shareholders. Under the Global Select Market, it has seen many increases in stock price over the years, and continues to do so.

*Mission Statement

Wynn Resorts Limited targets individuals with a high net-worth, by providing a variety of socioeconomic activities in the casino and resort industry. With our resorts in Las Vegas and Macau, we aim to reach a global customer base. Wynn Resorts Ltd. continuously seeks new ventures and opportunities for expansion in order to advance brand awareness and maximize shareholder wealth. We continue to provide the highest quality and unique resort experience to our customers.  Investment in the social and environmental well -being of communities in which we operate, such as Las Vegas and Macau, is a top priority. Wynn encourages employee growth, training, and development in order to provide the most luxurious and hospitable environment possible for our customers1.

*Corporate Headquarters Location

The corporate headquarters of Wynn Resorts Limited is located at Las Vegas Boulevard, South Las Vegas, Nevada. Known as Wynn Las Vegas, it houses ‘Encore’ and was originally opened in April of 2005.  ‘Encore’ was opened in December three years later, which was merged to represent Las Vegas Operations.

*Current CEO

Stephen A. Wynn is the Chairman and CEO of Wynn Resorts Limited, who founded the company in June 2002. Having been a leader developer, owner and operator of many destination resorts, he opened his first resort in Nevada, laste expanding overseas to Macau. He has developed his portfolio by diversifying into many resort operations, but remaining chiefly loyal to Wynn Resorts Limited.

*Current CFO

The current CFO and Treasurer is Matt Maddox, who also serves as the Principal Accounting Officer. After holding many positions in the company, he was promoted to CFO in March 2008, and has been serving as one of the executive directors since2.

*Stock Classifications

Wynn Resorts Limited has a large volume of common stock; over 917 000. The price of the common stock varies, although it has been on the rise over the past year. Selected financial information is available in the Annual Report.

*Exchange

All stocks is exchanged on the National Association of Securities Dealers Automated Quotations (NASDAQ) and is part of the S&P 500.  Listed under the Consumer Services industry, it has a high rating by shareholders and the community at large.

Projections

Past performance is often a good indicator of future performance; and Wynn Resorts Limited has experienced significant financial performance, especially in the past twenty-four month period.

The company is reported to generate approximately 70% of its revenues from the ownership of properties itself, both from Las Vegas and Macau3. The remainder of revenues comes from the sale of its stock, which is traded on the NASDAQ stock exchange, as aforementioned.

Months (24 period)

Figure 1: Recent Stock Performance

According to the graph above, there has been generally consistent levels of high stock prices, which indicate positive business growth and shareholder interest. In particular, the ending price for the current month in 2013 is at its highest in twenty-four months, and is set to continue for many more months to come.

One of the ways that Wynn Resorts Limited maintains positive financial performance is its strategy. It is a legal requirement for at least one executive director of the company to hold 10% of the company’s capital stock4. Therefore, as a majority of the company’s stock is held by employees, it is able to function on the market, as it does, without suffering huge losses; this is also due to the nature of the business.

Current Events

In recent times, there have been certain events that have both directly and indirectly affected the company’s financial performance. These have had limited effects on business, but nevertheless have impacted the company’ image.

As of August 2012, a former employee sued Wynn Resorts over a cancellation of a 20 percent stock holding in Hong Kong, valued at over $US2.8 billion5. The lawsuit has brought CEO Stephen Wynn and General Counsel Kim Sinatra as defendants to the case, who have denied all allegations to their charges, citing jurisdiction issues of the court (see Appendix A).

This turn of events can be seen to have a financial impact to stock prices, as during August 2012, there was a noticeable drop in stock price (see Figure 1). Although there has been no outcome from the trial as of late, the allegations of key executive figures in the company has been sufficient to upset prices, at least in the short term6.

Comparatively, neutral ratings by independent financial analysts have also had impacts in the business circle of investors. Despite intensive operations and increasing revenues, the company has met with fierce opposition in Macau and limited diversity in domestic markets, leading to a neutral rating on the NASDAQ stock exchange7. This has indirectly led to an awareness of the tainted company image in the eyes of shareholders8.

Despite these effects, the company has continued to push for open markets and shareholder growth (see Appendix B). However, the increased business pursuits may need to be traded for customer loyalty pursuits if the company wishes to retain its shareholders9.

Recommendation

Upon review of the company’s portfolio and financial standing, Wynn Resorts Limited seems to be a ‘buy’ option. However, after comparing and contrasting the financial health of the business with the current events effecting its performance, it is not so straightforward. Using the quick ratio, the company has large amounts of cash in accounts receivable, but business expenses due to fast growth show the business may not be able to sustain profits. This is due to mounting expenses and an unclear ratio, although it appears healthy; the reality is quite different. The debt and current ratios are not sufficient to cancel out this reality; and the final decision is: “don’t buy”.

Works Cited

Wynn Resorts, Limited. “Annual Report – 2012”. Wynn Resorts Limited. 2012. Web. May 2013.

Doh, Myung. “Wynn Resorts, Ltd.” Johnson and Wales University. 2009. Web. May 2013.

Page, Victoria. “Wynn Resort”. Bentley University. 2012. Web. May 2013.

Wynn Resorts, Limited. “Company Information”. Wynn Resorts Limited. 2012. Web. May 2013.

Granger, 2012. “Wynn Resorts Limited. InsideView. 2012. Web. May 2013.

Grimes, Michael. Wynn Resorts objects to Japan’s Court Say. Business Daily. 2012. Web. May 2013.

Dimne, Stephen. Wynn Resorts. Communication Insider. 2012. Web. May 2013.

Wilder, Jeff. Wynn Resorts, Limited Given “Neutral” Rating at Zacks (WYNN). Daily Political. 2012. Web. May 2013.

Wynn Resorts, Limited. “Investor Relations”. Wynn Resorts Limited. 2012. Web. May 2013.

Appendix A

Wynn Resorts objects to Japan court’s say

Michael Grimes | 15/05/2013

Wynn Resorts Ltd has objected to a Japanese court claiming any jurisdiction in the legal battle between the company and Kazuo Okada, a Japanese citizen and former Wynn director.
The news is given in a Wynn Macau Ltd filing to the Hong Kong Stock Exchange.
On August 28 last year, Mr Okada filed a complaint in Tokyo District Court against Wynn Resorts. He claimed a press release by the company in February last year had damaged his social standing and credibility. The news release from Wynn at that time outlined the company’s cancellation of Mr Okada’s near-20 percent stake in Wynn Resorts – then valued at US$2.7 billion (21.6 billion patacas). It also linked that fact to his alleged “unsuitability” to be a Wynn Resorts director because of his business dealings in the Philippines.
Mr Okada’s Japanese lawsuit – he has several others pending in the United States in connection with his ousting from the Wynn Resorts board – has named as defendants Wynn Resorts, its directors – including the firm’s founder Steve Wynn but excluding Mr Okada – and also Kim Sinatra, the firm’s general counsel.
“After asking the Okada parties to clarify the allegations in their complaint, the Wynn parties objected to the jurisdiction of the Japanese court,” said Wynn Macau in its latest Hong Kong filing.
“The Wynn parties are vigorously defending against the claims asserted against them in this matter,” added the document.
Mr Okada’s Jasdaq-listed Japanese company Universal Entertainment Corp. said in December it had filed a defamation suit in Tokyo against Reuters. The news agency had reported the Federal Bureau of Investigation in the U.S. was probing US$40 million in payments from Universal to a close associate of a former head of the Philippine Amusement and Gaming Corporation – around the time Universal Entertainment was granted concessions for a planned Manila Bay casino.
Pagcor is the country’s regulatory body for gaming. Universal Entertainment and Mr Okada strongly deny any wrongdoing.
Wynn Macau adds in the latest filing that Wynn Resorts has not so far received any subpoena from U.S. federal authorities – following the confirmation in early April by the U.S. Department of Justice – of a criminal investigation into Wynn’s US$35 million bequest to the University of Macau.

Appendix B

Wynn Resorts, Limited Given “Neutral” Rating at Zacks (WYNN) by Jeff Wilder

 Wynn Resorts, Limited (NASDAQ: WYNN)‘s stock had its “neutral” rating restated by Zacks in a research report issued to clients and investors on Tuesday,AnalystRatings.Net reports. They currently have a $147.00 price target on the stock.

Zacks‘ analyst wrote, “Wynn Resorts’ first-quarter 2013 adjusted earnings of $2.03 per share breezed past the Zacks Consensus Estimate as well as prior-year levels. Its revenues also grew year over year. Wynn Resorts has benefited from solid business in Las Vegas in the recent times and the recovery of the mass market category in Macau. We remain encouraged by the company’s strong brand name, and its ability to navigate through a difficult operating environment. However, fierce competition in Macau and the increased exposure to the sluggish VIP business remain concerns. Also, limited diversity even in well-positioned domestic markets remains a spot of bother for the company. Hence, we remain Neutral on the stock.”

A number of other firms have also recently commented on WYNN. Analysts at Nomura raised their price target on shares of Wynn Resorts, Limited from $147.00 to $155.00 in a research note to investors on Monday. They now have a “buy” rating on the stock. Separately, analysts at TheStreet reiterated a “buy” rating on shares of Wynn Resorts, Limited in a research note to investors on Monday. Finally, analysts at TheStreet reiterated a “buy” rating on shares of Wynn Resorts, Limited in a research note to investors on Friday, May 3rd.

Five analysts have rated the stock with a hold rating and twenty-one have assigned a buy rating to the stock. Wynn Resorts, Limited presently has an average rating of “Buy” and a consensus target price of $143.95.

Wynn Resorts, Limited (NASDAQ: WYNN) traded up 1.00% on Tuesday, hitting $141.77. Wynn Resorts, Limited has a 52-week low of $90.11 and a 52-week high of $138.28. The stock’s 50-day moving average is currently $122.2. The company has a market cap of $14.207 billion and a price-to-earnings ratio of 25.11.

Wynn Resorts, Limited (NASDAQ: WYNN) last released its earnings data on Thursday, April 25th. The company reported $2.03 earnings per share for the quarter, beating the analysts’ consensus estimate of $1.55 by $0.48. The company had revenue of $1.38 billion for the quarter, compared to the consensus estimate of $1.38 billion. During the same quarter last year, the company posted $1.33 earnings per share. Wynn Resorts, Limited’s revenue was up 5.0% compared to the same quarter last year. On average, analysts predict that Wynn Resorts, Limited will post $6.67 earnings per share for the current fiscal year.

The company also recently announced a quarterly dividend, which is scheduled for Thursday, May 23rd. Shareholders of record on Thursday, May 9th will be paid a dividend of $1.00 per share. This represents a $4.00 annualized dividend and a dividend yield of 2.85%. The ex-dividend date is Tuesday, May 7th.

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