4/6/2016
By Charles Payne, CEO & Principal Analyst

The company has released its preliminary first quarter financials with mixed results.  The numbers hints at a top-line beat, but there is lots of anxiety over the bottom line because of Macau.

Macau

Steve Wynn blew a gasket last November when table restrictions lowered the planned 500 tables at the new Wynn Palace opening this year.   As Mr. Wynn pointed out rooms are nice, but people come to gamble, and the high rollers need their own tables. 

On that note, the higher mass tables and slots can’t overcome lost revenue from high rolling VIPs.

There are signs the Communist government crackdown on corruption might be easing, and that would lift restrictions that have taken a major toll on Macau gaming.

Vegas

Las Vegas continues to do better-than-expected, but it’s not the driver of the stock anymore, and it would need to really get hot to overcompensate for Macau weakness.  We’d like to see room occupancy improve for the remainder of the year, with continued increases in REVPAR (revenue per available room).

Note: The Elaine Wynn lawsuit will be fully adjudicated in early 2017 and should have no material impact on the company.

Conclusion:

I think the stock is still oversold, but is vulnerable to the whims of the communist Chinese government.  Nonetheless, management building out more locations means greater market share when the market rebounds- it will rebound.  Recently, we asked subscribers to add to the position and then take profits +17% at $83.00.

At some point we will ask subscribers to add or create fresh position, but for now let’s continue to hold. This wasn’t the worst news, but the stock needs better visibility to get above $100.00. 

Charles Payne
Wall Street Strategies

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