Couple Factors Driving Wynn Resorts (WYNN) Stock Up

NEW YORK (TheStreet) -- Shares of Wynn Resorts Ltd  (WYNN) were soaring, up 7.06% to $109.25 on heavy volume in midday trading Thursday, along with other casino related stocks.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio pointed out during CNBC "Stop Trading" segment this morning that there is speculation about a possible merger between Wynn Resorts and MGM Resorts International (MGM).

Shares of MGM Resorts International are also up 3.07% to $20.32 today.

In addition, shares rallied following reports that analysts at Credit Suisse see signs of improvement in Macau, the only region in China where gambling is legal, according to Barron's.

Analysts at the firm see better figures for May revenue and April traffic trends in Macau, Barron's noted.

About 3.5 million shares of Wynn Resorts have exchanged hands as of 12:58 p.m. ET today, compared to its average trading volume of about 2.85 million shares a day.

Las Vegas-based Wynn Resorts is a developer, owner and operator of destination casino resorts with two segments: Las Vegas and Macau operations.

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 deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WYNN, with its decline in revenue, underperformed when compared the industry average of 7.3%. Since the same quarter one year prior, revenues fell by 27.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 37.98% 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, WYNN's net profit margin of -4.08% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.76%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 119.81% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 119.7% when compared to the same quarter one year ago, falling from $226.90 million to -$44.60 million.
  • Net operating cash flow has significantly decreased to -$15.01 million or 107.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: WYNN Ratings Report

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