Why An Earnings Beat Is Likely For Wynn Resorts (WYNN) In Q3?

Wynn Resorts, Limited (NASDAQ:WYNN) is slated to report third-quarter 2017 numbers on Oct 26, after market close. Its revenues and earnings are expected to grow year over year.

Last quarter, the company surpassed the Zacks Consensus Estimate for earnings owing to a substantial improvement in revenues.

Notably, Wynn Resorts has a decent earnings surprise history. The company’s trailing four-quarter average earnings surprise is a positive 11.35%.

Wynn Resorts, Limited Price and EPS Surprise

Wynn Resorts, Limited Price and EPS Surprise | Wynn Resorts, Limited Quote

Also, a look at the company’s price performance reveals that it outperformed the industry year to date. Shares of Wynn Resorts have gained around 67.5% compared with the industry’s growth of 26%.

Will the stock keep rallying post third-quarter earnings release? It majorly depends on whether it is able to maintain its earnings momentum.

Our proven model shows that Wynn Resorts has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat in the this quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate is pegged at +1.94%. This is a major indicator of a likely positive earnings surprise.

Zacks Rank: Wynn Resorts’ Zacks Rank #2 (Buy) when combined with a positive ESP makes us reasonably confident of an earnings beat.

Moreover, Wynn Resorts’ business activities and prospects encouraged analysts to revise earnings estimates recently. As a result, the Zacks Consensus Estimate of $1.37 for the just-concluded quarter has moved up 9.6% over the last 30 days. Additionally, it reflects a year-over-year improvement of a solid 82.1%.

Further, the Zacks Consensus Estimate for revenues of $1.56 billion for the to-be-reported quarter reflects year-over-year growth of 40.6%.

Factors Likely to Affect Q3 Results

Per Macau’s Gaming Inspection and Coordination Bureau (“DICJ”), gross gaming revenues (GGR) rose in all the three months of the quarter. This, in turn, indicates that the casino hub is firmly on its path to recovery. In fact, Macau’s VIP numbers is reported to have witnessed 35% expansion in the quarter, with VIP baccarat leading the surge of casino GGR.

Thus, we expect Wynn Resorts’ consistent efforts to boost tourism and traffic in Macau to bolster third-quarter performance aided by the improved operating environment therein.

Particularly, the company’s full-scale integrated resort in Cotai, Wynn Palace, continues to attract visits by tourists and leisure gamblers and should thus scoop up the quarter’s revenues. Provision of better non-gaming options might further propel results in the to-be-reported quarter.

Meanwhile, the company’s properties in Las Vegas are likely to continue to cash in on the positive trends of improving employment rate and increasing tourism numbers in the region, thereby boosting the quarter’s top- and bottom¬-line growth.

However, stringent capital controls by the Chinese government and increased audits of the junket industry by DICJ in order to stop money laundering might have somewhat restricted gaming revenues in Macau. Also, higher promotional allowances and distribution of higher incentives in the slots as well as in the mass market to hold market share might hamper the quarter’s profitability.

Stocks to Consider

Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has an Earnings ESP of +0.94% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Penn National Gaming, Inc. (NASDAQ:PENN) has an Earnings ESP of +5.89% and a Zacks Rank #2 (Buy).

Eldorado Resorts, Inc. (NASDAQ:ERI) has an Earnings ESP of +15.79% and a Zacks Rank #3.

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