Is Wynn Resorts a Winner in the Resorts & Casinos Industry?

Wynn Resorts (WYNN) reported double-digit revenue growth in its recent quarterly release. However, its bottom-line performance failed to impress investors. So, let’s evaluate if it is wise to bet on the stock now, given that the industry continues to struggle from pandemic-led disruptions.

Las Vegas-based Wynn Resorts Limited (WYNN) designs, develops and operates integrated resorts. The company’s segments are Macau Operations; Las Vegas Operations; and Encore Boston Harbor. With the steady improvement in the resorts and casino industry, the company exhibited double-digit revenue growth in its recent fourth-quarter earnings release.

However, the prolonged recovery in its Macau operations, which contributed approximately 70% to its revenue and earnings, has stymied its overall growth.

WYNN stock has slumped 34.2% in price over the past nine months and 13.1% over the past six months to close yesterday’s trading session at $88.63. In addition, the company recently agreed with Realty Income to sell its Encore Boston Harbor’s Land and real estate assets.

Here’s what could shape WYNN’s performance in the near term:

Sale-Leaseback Transaction

WYNN agreed to sell all of Encore Boston Harbor’s land and real estate assets to Realty Income for $1.70 billion in cash, representing a 5.9% cap rate. WYNN will continue to run the hotel at the five-star level for which it is known. In addition, it will engage in a triple-net leasing agreement with Realty Income for Encore Boston Harbor when the transaction closes. The lease will include an initial total yearly rent of $100 million and a duration of 30 years, with one tenant renewal option at 30 years. The company intends to use the transaction proceeds for several of its coming development projects and the potential to retire other debt.

Source: https://www.entrepreneur.com/article/421303