TSC Ratings' Updates: Gannett

Wynn Resorts(WYNN Quote), which engages in the development, ownership and operation of destination casino resorts, was upgraded to buy.

Upgrading Wynn Resorts was driven by some important positives, which we believe should have a greater impact than any weaknesses and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, growth in earnings per share and increase in net income. However, in the end, we feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Revenue rose by 20% since the same quarter one year prior --underperforming the industry average's revenue growth rate of 24.4%. Despite the lower-than-average revenue growth, its growth appears to have helped boost the earnings per share. As a result, Wynn Resorts in its most recent quarter reported significant earnings per share improvement compared with the same quarter a year ago.

An important factor contributing to its earnings has to do with the company's gross margin of 37.10%, which we consider to be strong. Regardless of Wynn's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the casino's net profit margin of 33% significantly outperformed against the industry.

The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the hotels, restaurants and leisure industry average, but is greater than that of the S&P 500. The net income increased by 203.7% when compared with the same quarter one year prior, rising from $89.55 million to $271.99 million.

The company's earnings have been somewhat volatile recently, making it difficult to accurately predict what it will earn in the upcoming quarters. But we feel it is poised for EPS growth in the coming year. During the past fiscal year, Wynn Resorts reported lower earnings of $2.34 a share vs. $5.56 a share in the prior year. In the upcoming fiscal year, analysts' are expecting earnings to improve to $3.39 a share.