Thursday, January 10, 2008

Wynn Resorts (WYNN)

Wynn Resorts Ltd (WYNN)

Wynn Resorts is a developer & operator of gaming resorts. Currently, Wynn operates two resorts located in Las Vegas, Nevada & Macau, China. Two new resorts (Encore in Las Vegas & Diamond Casino in Macau) are currently under development and expected to open in the next two years. Wynn targets high end consumers offering first class amenities including gaming, entertainment, shopping & restaurants. Combined The Wynn Resorts offer 3,316 rooms with 221,000 square feet of gaming. Revenues totaling $2.54 billion are generated from the casino (50%), hotel rooms (18%), food & beverage (19%), and other ventures (13%) including entertainment and retail. Pick your side; here is the bull & bear argument:

The city of Macau has surpassed Las Vegas as the largest gaming market in the world and Wynn Resorts is in great position to capitalize. With two new resorts in the making Wynn has potential for exponential growth over the next few years. Steve Wynn has a proven track record producing some of the most flourishing resorts in Vegas history including the Bellagio, Mirage, and Treasure Island.

Wynn Resorts is heavy in debt (around $2.4 billion) and high interest rates could make it difficult to be profitable. Macau is a gamble with no long term proven success in the region. The Las Vegas market is extremely competitive with all the major casinos striving for the high end players. The gaming industry is extremely vulnerable to changes in economy. With the US heading toward a period of economic downturn Wynn faces an uncertain future.

No comments: