This year may not be as productive for Wynn Resorts as previously imagined. Union Gaming Securities (UG) has updated its forecast on the Las Vegas-based casino operator, asserting that its EBITDA (earnings before interest, taxes, depreciation and amortization) will be 2.5% lower than other forecasts have indicated. The update, provided by UG analyst John DeCree, comes mainly from Wynn’s softened position in Macau.
Wynn EBITDA is now expected to be just $1.89 billion, whereas it was previously estimated that the company would finish the year at $1.94 billion. Wynn holds a license in Macau through its Wynn Macau Ltd. arm, and the gambling enclave is not producing, to no fault of casinos, the results this year that many had hoped.
DeCree adds, “The outlook in Macau has become increasingly cloudy with ongoing VIP softness, social unrest in Hong Kong, economic implications for the U.S.-China trade war, [and] incremental competition from regional Asian gaming markets…”
This has led to the analyst to conclude that Wynn Macau and Encore, the all-suite boutique hotel attached to the casino, will see EBITDA of right at $661.3 million and that Wynn Palace, which is located on the Cotai Strip, will ultimately report EBITDA of $784.6 million. The changes come as a result of a new review of data from Wynn, the political climate and UG’s own proprietary research efforts.
Wynn Macau was able to report a year-on-year increase in net profit of 5.2% last quarter. Profit reached $168.6 million, compared to the $160.3 million from 2018, but VIP gaming saw a decline. Wynn Macau reported a 33.4% drop in VIP gaming for the second quarter after watching its VIP turnover slip from $13.93 billion in 2018 to $9.28 billion this year.
In general terms, Wynn is still recovering after the drama surrounding its founder and former CEO, Steve Wynn and his (alleged) sexually-charged lifestyle. It has also spent a great deal of money getting the Encore Boston Harbor property up and running, but knows that a brighter future is coming. In an effort to spread its confidence to Wynn Resorts shareholders, it recently announced that it would pay a $1.00-per-share dividend to all stockholders on record as of August 16.
