NEW YORK (TheStreet) -- Wynn Resorts (WYNN) - Get Report stock is falling by 2.57% to $53.02 in midday trading on Tuesday, after junket operator Neptune Group warned it may need to cut back on its business, driving Macau casino stocks down, Reuters reports.
Neptune is a loan facilitator for VIP gamblers that account for more than 70% of monthly revenues at casinos.
"While we do not believe Neptune is leaving the Macau scene we do believe that more junket closures are likely and that liquidity could increasingly become a concern that could drive further downside to the VIP story," Union Gaming Securities Asia analyst Grant Govertsen told Reuters.
Macau's VIP industry is facing pressure from China's government that is seeking to weed out corruption and illegal capital, Reuters noted.
Separately, TheStreet Ratings team rates WYNN RESORTS LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate WYNN RESORTS LTD (WYNN) a HOLD. The primary factors that have impacted our rating are mixed — some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 37.14% 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 5.42% trails the industry average.
- WYNN, with its decline in revenue, underperformed when compared the industry average of 3.8%. Since the same quarter one year prior, revenues fell by 26.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- WYNN RESORTS LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, WYNN RESORTS LTD's EPS of $7.17 remained unchanged from the prior years' EPS of $7.17. For the next year, the market is expecting a contraction of 55.4% in earnings ($3.20 versus $7.17).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 67.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 72.00% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- Net operating cash flow has decreased to $201.34 million or 45.41% 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.
- You can view the full analysis from the report here: WYNN