Luxury hotels and casino operator Wynn Resorts (NASDAQ:WYNN) reported Q4 CY2024 results beating Wall Street’s revenue expectations, but sales were flat year on year at $1.84 billion. Its non-GAAP profit of $2.42 per share was 91.1% above analysts’ consensus estimates.
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Wynn Resorts (WYNN) Q4 CY2024 Highlights:
- Revenue: $1.84 billion vs analyst estimates of $1.78 billion (flat year on year, 3.1% beat)
- Adjusted EPS: $2.42 vs analyst estimates of $1.27 (91.1% beat)
- Adjusted EBITDA: $519.4 million vs analyst estimates of $560.4 million (28.2% margin, 7.3% miss)
- Operating Margin: 20%, in line with the same quarter last year
- Market Capitalization: $8.53 billion
Company Overview
Founded by the former Mirage Resorts CEO, Wynn Resorts (NASDAQ:WYNN) is a global developer and operator of high-end hotels and casinos, known for its luxurious properties and premium guest services.
Casino Operator
Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’? Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can't do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Over the last five years, Wynn Resorts grew its sales at a weak 1.5% compounded annual growth rate. This fell short of our benchmarks and is a rough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Wynn Resorts’s annualized revenue growth of 37.7% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note that COVID hurt Wynn Resorts’s business in 2020 and part of 2021, and it bounced back in a big way thereafter. 
Wynn Resorts also breaks out the revenue for its three most important segments: Casino, Hotel, and Dining and Entertainment, which are 60.5%, 17.7%, and 14% of revenue. Over the last two years, Wynn Resorts’s revenues in all three segments increased. Its Casino revenue (Poker, slots) averaged year-on-year growth of 74.8% while its Hotel (overnight bookings) and Dining and Entertainment (food, beverage, Wynn Interactive) revenues averaged 26.9% and 7.5%.
This quarter, Wynn Resorts’s $1.84 billion of revenue was flat year on year but beat Wall Street’s estimates by 3.1%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.
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Cash Is King
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Wynn Resorts has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 12.3% over the last two years, slightly better than the broader consumer discretionary sector.
Key Takeaways from Wynn Resorts’s Q4 Results
We were impressed by how significantly Wynn Resorts blew past analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its Casino revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The stock remained flat at $80.60 immediately after reporting.
Wynn Resorts put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
