Morningstar

Place Your Bets Now on Wynn

Place Your Bets Now on Wynn
Securities In This Article
Wynn Resorts Ltd
(WYNN)

Dan Wasiolek: Wynn Resorts share price has lost recently, as concerns over slowing Chinese economic growth weigh on the company, given 75% of its EBITDA is generated from Macau, the only place in China were gambling is legal. While such economic slowdown would result in reduced Macau revenue growth for Wynn in 2019, we believe the pullback in shares presents an attractive opportunity for investors to gain exposure to an industry with strong long-term supply and demand characteristics.

Gaming supply in Macau is limited to just six licenses, of which Wynn has one. Meanwhile, demand for gaming in Macau is well supported by only 2% of China's 1.4 billion population visiting the region this year, a figure well below the 12% of U.S. citizens traveling to Las Vegas in 2018, and one set to expand along with country's growing middle income class. Also, the Chinese government desires Macau to become a world destination resort, supported by multibillion dollar infrastructure investments.

As a result, we see both Wynn and Macau industry revenue growth averaging around 6% annually long term, while Wynn expands its EBITDA margin in the region to 31% in 2027 from 28% in 2017. With shares trading at a meaningful discount to our $161 fair value estimate, we think shareholders should place their bets.

More in Stocks

Consumer Defensives: Despite Angst, Thirsty Investors Have Names to Pursue

Estee Lauder, Kraft Heinz, and Dollar General are our top consumer defensive stocks.
Erin Lash, CFA

Industrials: Many Stocks Overvalued After Q3 Outperformance

Our top stocks in this sector are Chart Industries, Wesco, and CNH Industrial.
Brian Bernard, CFA, CPA

Basic Materials: Despite Index Rise, We See Multiple Long-Term Opportunities

In this sector, our favored stocks are Albemarle, Dow, and FMC.
Andrew Bischof, CFA and Travis Miller

About the Author

Dan Wasiolek

Senior Equity Analyst
More from Author

Dan Wasiolek is a senior equity analyst, AM Consumer, for Morningstar*. He covers gaming, lodging, and online travel. Names covered within the gaming industry are Wynn Resorts, Las Vegas Sands, MGM Resorts, Caesars Entertainment, Penn Entertainment, and DraftKings. In the hotel industry Dan covers Marriott, Hilton, InterContinental, Hyatt, Wyndham, Choice, and Accor. Other travel related names under his coverage are Booking Holdings, Expedia, Airbnb, Tripadvisor, Sabre, and Amadeus.

Before joining Morningstar in 2014, Wasiolek spent 16 years as an analyst and portfolio manager covering US mid- and large-cap strategies for Driehaus Capital Management. During the first half of his time at Driehaus, Dan’s responsibilities as an analyst included analyzing and recommending stocks across all sectors and industries for inclusive in the portfolios. Then in the second half of his tenure at Driehaus, Dan was responsible for stock selection and portfolio management of the US mid- and large-cap strategies, as well as co-managing in-house smaller-cap portfolios.

Wasiolek holds a bachelor’s degree in business administration from Illinois Wesleyan University and a master’s degree in business administration, with a concentration in finance, from the DePaul University Kellstadt School of Business.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

Sponsor Center