Wynn's Earnings: What We're Watching This Quarter

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- Last year, Wynn Resorts (WYNN) saw overall revenues increase approximately 26% which was primarily driven by impressive performance in Macau. Wynn competes directly with Las Vegas Sands (LVS), MGM Resorts International (MGM), SJM, Galaxy and Harrah's among others.

This quarter, we are watching Wynn's performance in Las Vegas which has started showing signs of a recovery. In Q4 2011, revenues from Las Vegas operations witnessed an increase of 7.2% vis-a-vis Q4 2010. We are also optimistic about VIP table games turnover, we expect it to show impressive growth due to the potential size of the Macau gaming market.

See our full analysis for Wynn Resorts

Macau VIP Table Games

Macau VIP table games are a major contributor to Wynn's revenues. In 2011, revenues grew nearly 30% in this segment. According to our estimates, Macau VIP tables games contribute almost half of Wynn's current valuation. We expect VIP table games to drive revenue growth for casino operators in Macau including Wynn due to the following factors:

VIP Baccarat volumes are expected to increase: VIP Baccarat is gaining popularity in Asia, particularly China. It has been the strongest contributor to Macau's gaming industry with approximately 73% share of the total casino revenues. In 2011, revenues grew 45% and reached $24.5 billion.

Expected completion of Cotai project by 2015: The expected completion of the Cotai project in 2015 will lead to an increase in VIP table games turnover. Wynn's CEO Steve Wynn has asserted that the company would focus to target the high end gaming market.

Increasing population of Chinese HNIs: VIP gaming currently represents two-thirds of Macau gross gaming revenue. According to a Cap Gemini-Merrill Lynch Private Wealth report, China recently surpassed the UK to become the fourth largest population of HNIs.

Our price estimate for Wynn Resorts stock stands at $137, which is at a premium to the current market price.

Click here to find out how a company's products impact its stock price at Trefis

Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.