Shares of Wynn Resorts (WYNN) - Get Report fell 0.49% to $95.95 in early afternoon trading ahead of the release of the company's fourth-quarter results after the close Thursday, despite spending most of the morning in positive territory.
Analysts are expecting the company to report a decline in fourth quarter earnings to $0.87 per share from the $1.03 per share it earned in the year ago period. Revenue is expected rise year over year, however, to $1.257 billion from $947 million a year ago.
The rest of the sector was experiencing declines due to the weaker than expected top- and bottom-line results from Las Vegas Sands (LVS) - Get Report last night. MGM Resorts (MGM) - Get Report shares were down 0.7% to $29.39 and Melco Crown Entertainment (MPEL) was down 0.25% to $17.66.
Sands reported adjusted fourth-quarter earnings of 62 cents per share, 4 cents off the consensus estimate. Revenue of $3.08 billion fell short of Wall Street's $3.12 billion expectations.
Wynn has placed new emphasis on mass market gaming in recent quarters in order to reduce risks in Macau --which has now experienced a turnaround of five consecutive months of year over year revenue increases-- and saw their revenue decline 3.3% in 2016. Over 60% of Wynn's revenue comes from Macau.
"We expect Wynn to continue to perform better in the Las Vegas market, due to increased convention attendance, airline capacity and domestic gaming in the region," analysts at Trefis wrote in a recent note. "Additionally, no new casinos are coming to the Las Vegas strip until 2019, which will ensure stable volumes for Wynn from its Las Vegas operations."
Wynn's operations in Las Vegas are driven by the city's tourism industry as about 65% of revenue from the region is from non-gaming resources. In Macau, just 11% of the company's revenue comes from non-gambling sources.
Wynn Palace, which opened on Macau's Cotai Strip in August, has been outperformed by competitors, but Wynn Palace is designed to have more diverse offerings than its other gambling-centered Macau properties. With the Chinese government's new emphasis on turning Macau into more of a tourist destination than just a gambling one, Wynn Palace should benefit from the diversity.
However, Macau is about to get more crowded with the opening of MGM Cotai in the second half of 2017, which could take customers from Wynn Palace. But Trefis believes that the increase in Macau visitation should be enough to counteract the increased competition.