NEW YORK (TheStreet) -- Shares of Wynn Resorts (WYNN) were down 4.9% to $103.79 on Monday following a note from analyst firm Sterne Agee that suggests gaming revenue in Macau is falling in June so far.
In a note to investors, Sterne Agee CRT analyst David Bain said, "According to our channel checks, Macau table-only gross gaming revenue ("GGR") is MOP3.3 billion (USD$410m) from June 1 to June 7." The June run rate suggests that GGR will fall 46% year over year in June to MOP14.6 billion ($1.8 billion).
"Our June GGR growth forecast range of between -33% and -38% YoY remains unchanged," Bain wrote. "Given abnormal market share and other checks, we believe hold negatively impacted early June results. Still, results are disappointing especially given a two week proximity to the opening of Galaxy's Phase 2."
The analyst note helped bring down shares of casinos with a presence in Macau such as Wynn.
About 1.2 million shares of Wynn were traded by 10:06 a.m. Monday, compared to the company's average trading volume of about 2.7 million shares a day.
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 7.5%. 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 47.94%, 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