Wynn Resorts Earnings Estimates Are All Over the Place

Posted on: April 28, 2020, 10:13h. 

Last updated on: April 28, 2020, 12:25h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

With the coronavirus outbreak still weighing on the gaming industry, it’s not surprising that analysts are divided on how the health crisis is affecting individual operators’ financial results. But when it comes to Wynn Resorts (NASDAQ:WYNN), there’s nothing close to a consensus.

Wynn Earnings Confusion
Dispersion data indicate no one knows what to expect with Wynn 2020 earnings. (Image: Twitter)

This year, Wynn is dealing with temporary closures of its two Las Vegas Strip Venues and Encore Boston Harbor by COVID-19. Those shutdowns follow a 15-day halt in business in Macau, a market that in any given quarter can account for two-thirds to 80 percent of the operator’s earnings and revenue. Although Wynn stock more than doubled off its 52-week low hit in March, it’s still lower by 40.40 percent year-to-date.

Wynn Macau, the company’s China unit, already said it expects first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) to be materially affected by the COVID-19 pandemic. It’s losing roughly $2.5 million per day, not including $500,000 in interest expenses, to simply keep its two venues there open. Even with that, analysts’ estimates for the company’s 2020 earnings per share (EPS) are all over the map.

For now, though, investors should take the purportedly ‘consensus’ earnings expectations and price targets with a grain of salt, especially for certain sectors and stocks, where there really isn’t much consensus among analysts,” according to a Barron’s analysis of S&P 500 companies with wide dispersion in EPS projections.

The publication’s research indicates that analyst estimates on Wynn 2020 EPS currently range anywhere from a loss of $12.60 to a gain of $5.60.

Good Luck Reaching Consensus

As measured by standard deviation, the 5.9 percent spread in Wynn forecasts is high and is exceeded by just six other S&P 500 members, three of which are travel and leisure companies. The Encore operator is the only gaming company on the Barron’s list of 31 companies with noticeably wide ranges in 2020 earnings projections.

Wynn isn’t the only consumer cyclical stock confounding Wall Street. Estimates for the group’s contributions to S&P 500 2020 earnings range anywhere from earnings of around $3 a share to nearly $13, one of the widest spreads among the 11 sectors featured in the benchmark.

As of April 24, 30 S&P 500 members said they already had or were proceeding to yank 2020 guidance, citing COVID-19. Four of those firms are consumer discretionary names, according to FactSet data. Just 20 companies are offering up full-year forecasts, none of which hail from that sector.

What to Expect

Wynn is slated to report first-quarter results on May 14 with analysts calling for a loss of $1.05 per share.

The company has yet to publicly comment on profit and revenue expectations for the remainder of this year. But operators are already saying the coronavirus makes it difficult to forecast what the rest of 2020 has in store.

It’s reasonable to expect Wynn’s April through June numbers will be rough, because visits to Macau are still at rock-bottom levels and the company isn’t taking Las Vegas reservations until May 22. That means it will have endured a zero revenue climate on the Strip for nearly two of the second quarter’s three months.