Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
-- Wynn Resorts
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and generally higher debt management risk.
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Highlights from the ratings report include:
- WYNN RESORTS LTD has improved earnings per share by 41.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WYNN RESORTS LTD increased its bottom line by earning $4.89 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($5.45 versus $4.89).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 13.1% when compared to the same quarter one year prior, going from $122.03 million to $138.06 million.
- 35.40% is the gross profit margin for WYNN RESORTS LTD 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 net profit margin of 11.00% trails the industry average.
- WYNN has underperformed the S&P 500 Index, declining 23.89% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Net operating cash flow has decreased to $322.33 million or 36.52% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company has a P/E ratio of 20.2, below the average leisure industry P/E ratio of 20.6 and above the S&P 500 P/E ratio of 17.7. Wynn has a market cap of $10.6 billion and is part of the
industry. Shares are down 4.8% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.