Wynn Valuation So Low, It’s ‘Ridiculous’ Says Analyst
Posted on: February 14, 2025, 10:07h.
Last updated on: February 14, 2025, 10:22h.
- Wynn stock barely reflects potential Macau upside, says an analyst
- He argues the shares are undervalued and aren’t pricing in UAE promise, either
On the back of a solid fourth-quarter earnings report, shares of Wynn Resorts (NASDAQ: WYNN) are higher by about 9% in early trading Friday on volume that’s already exceeded the daily average, but one analyst says a “ridiculous” situation is at play with the stock.
In a new report to clients, Stifel analyst Steven Wieczynski observes that based on current valuation levels, investors are assigning essentially no value to Wynn’s Macau arm, which consists of two casino resorts in the Chinese territory. Arguably, that’s odd because Wynn Macau is the biggest contributor to the parent company’s earnings and revenue.
We continue to believe shares are trading at an unrealistic discounted multiple with very little credit/value being ascribed to WYNN’s Macau operating assets, and we believe WYNN’s management feels the same way given their accelerated share repurchases at current levels,” said the Stifel analyst.
Under a share buyback plan that was lifted to $1 billion last November, the gaming company repurchased $200.3 million worth of its shares in the December quarter, bringing the 2024 tally to $386 million. The operator has $813 million remaining under the repurchase plan.
Wynn Prefers Thailand, UAE to Las Vegas for Expansion
Regarding expansion, Wynn is sitting tight on its property in its home market of Las Vegas, opting to focus on potential opportunities and the construction of Wynn Al Marjan Island in the United Arab Emirates (UAE).
Wynn recently completed $2.4 billion in financing for the first casino resort in the Middle East — a transaction representing the largest leisure/hospitality loan in UAE history. Thirty-five floors of the venue are complete and it remains on pace to open in early 2027.
“Right now we’re very focused on Wynn Al Marjan. It’s a brand-new market — a $3 billion to $5 billion market — and it’s a tremendous opportunity for us, so that’s where we’re very focused at the moment,” said CEO Craig Billings on a Thursday conference call with analysts.
He added that the company is “active in Thailand though it’s early days.” The Southeast Asian nation is expected to finalize casino gaming legislation this year with the hopes of expediting the permitting process so that construction on gaming venues can begin as soon as 2026.
Wynn Stock Not Getting UAE Credit, Either
In laying out the case for Wynn being a deeply discounted stock – perhaps to the point of absurdity – Wieczynski estimates that the operator’s Las Vegas casino hotels are worth $43 a share with another $8 per share derived from Encore Boston Harbor. Another $3 per share comes from the company’s property holdings.
The UAE project, which other analysts have argued isn’t adequately reflected in the share price, is worth $10 to $17 a share, he added. Lean conservative and call it $10 — and throw in the $11 a share Wieczynski estimates the royalty stream from Wynn Macau is worth — and that’s $75. Wynn closed at $80.47 and on that basis, implying markets currently assign less than $5.50 per share in value from Macau to Wynn’s stock price.
“We don’t care what kind of environment you want to price into Macau, but there is no way you can say their Macau assets are only worth ~$5/share. That just doesn’t make sense to us,” concludes Wieczynski.
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