This afternoon, Wynn Resorts (NASDAQ: WYNN) had its turn in the earnings lineup, and the company failed to meet analyst estimates for the quarter, and is being punished in after hours trading as a result.Going into this afternoon's earnings announcement, analysts had been hoping to see the company show earnings of $0.44 per share on revenues of $703.53 million. Adjusted earnings for the quarter were far below this, with a reported $0.07 cents per share on only $614.3 million in revenues.
Including various non cash charges and a $98.8 million tax payment, the company actually swung to a loss in the quarter of $159.6 million, or -$1.49 per share.
For the full year, the company took a serious hit in gambling revenues, with a massive 25.3% drop in gambling revenues during 2008 compared to those of 2007. Non-gambling revenues were also lower during 2008, but not nearly as sharply, with a reported 37% drop compared to 2007.
Wynn is not alone in its hard times. The current recession has led to consumers putting more money away, and less out on the casino tables. Last year, tourism to Vegas' strip suffered its worse annual decline.
After hours traders are selling off the stock which is currently down a bit over 11% in extended hours trading. This is slightly higher than where it was when I started writing this piece when it was off by about 16%. We will get a better idea of how the market reacts to this afternoon's earnings announcement in the morning when full trading is resumed.
It's fairly obvious that people are just a bit too concerned with the economy and their economic future to be running to Vegas and betting away their hard earned money. Until the overall economy gets back on its feet, and we stop hearing so much about foreclosures and layoffs hitting America, casino stocks like Wynn are probably not the best bet at this time. For once, the house did not win this time around.
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Reader Comments (Page 1 of 1)
2-25-2009 @ 9:17AM
BHarrison said...
Well, if Steve Wynn, "Mr. Las Vegas", is in deep trouble, then ALL of Las Vegas is in deep trouble.
As I understand it, Turnberry Construction's decision to open their latest project without the internal completion of the upper floors of the project is reflective of the overall problems in Las Vegas.
Las Vegas has an "excess inventory" of recently constructed expensive casino-hotels, condominiums, and private homes . . . . leading the nation in the foreclosure rates. Now with the dirth of fewer and fewer visitors and gamblers, there are sure to be many major changes in the ownership of many of the major hotel-casinos, and other businesses.
With the demise of Atlantic City gambling, one can only wonder what the Las Vegas of the future may turn out to be. It looks like all of that exorbitant expansion is one bet that "the house" is going to lose on.
And it looks like some of those major projects are going to become white elephants standing in the glare of the desert sun. The speculators have lost their investments, and the average prudent people aren't going to run off for a gambling junket in Las Vegas either.
Las Vegas had made the transition from being a gambling mecca to a shopping mecca; but the bubble has burst even in Las Vegas. The stark reality for the future looks rather bleak, especially with the foreclosure rates being so high.
Las Vegas' "recovery" is totally dependent on the recovery of the rest of America; it's recovery will lag the rest of the nation's recovery . . . dispoable income for gambling and luxury shopping will be possible only after people feel confident that they are financially secure; and that will be a long time coming.