Wynn Resorts, Limited WYNN

Key data

The business

Wynn runs four resorts. Wynn Macau and Wynn Palace sit on either side of the water in Macau and together are the largest piece. Wynn Las Vegas and Encore occupy the north end of the Strip. Encore Boston Harbor is a single property on the Mystic River. A fifth, Wynn Al Marjan Island, is under construction in Ras Al Khaimah in the United Arab Emirates and will be the first casino resort on the Arabian Peninsula.

The moat is the address and the finish. Wynn charges more per room and per table than almost anyone because the buildings are better, and has held that premium for twenty years across three jurisdictions. That is a brand moat in the only form that counts here, the willingness of a wealthy customer to pay more for the same bet.

The Macau licence runs to 2032 alongside the other five operators. Al Marjan is the interesting one: the emirate granted the first commercial gaming licence in the region, and for some period Wynn will be the only legal casino within a short flight of a very large pool of wealth that now flies to Monaco, London or Singapore to gamble.

The numbers

Revenue has been flat for four quarters at $1.86B and operating income flat at roughly $0.30B, while earnings per share went from $0.64 to $1.32. The business is not growing. The per-share number is, because the share count keeps falling.

The fiscal-year table is the harder read. Revenue rose from $6.53B to $7.14B across three years while earnings per share fell from $6.32 to $3.14. The top-line recovery never reached the bottom line, because interest on $12.34B of borrowings takes an increasing share. Trailing cash earnings are $1.95B against $10.77B of net debt, so 5.5 times, and shareholders' equity is negative $0.17B.

Las Vegas is the surprise. One property on the Strip earns nearly three quarters of what two Macau resorts earn combined, and did it at slightly unlucky hold. Boston set quarterly records for room rate and hotel revenue. The finished business is performing.

The market is reading the earnings recovery as the business. Trailing earnings per share of $4.17 are rising off a $3.14 low while revenue sits still, which is buybacks doing the work. At 5.5 times borrowings with a project still to fund, the capacity to keep buying is the variable, not the desire.

Management

The largest individual holder has been paid to cap his own upside. Tilman Fertitta wrote covered calls against 12,102,900 shares between February 5 and August 12, across 79 separate lines, at strikes from $113 to $150 and a weighted average of $124.08. He collected $59.1 million of premium and sold no common stock at all. The final expirations run to November 20. With the stock at $81.68 every strike is far out of the money, so he keeps the shares and the money both, and the position pays him for the stock going nowhere. No officer or director bought in the open market over the same stretch.

The company itself has been buying, $0.38B of repurchases in fiscal 2025 against $1.35B of operating cash and $0.66B of capital spending, with $0.17B of dividends. That is the arithmetic keeping earnings per share rising on flat revenue.

On the project, management increased the total budget for Al Marjan by approximately $600 million and moved the opening to September 2027, attributing about half the increase to regional conflict disruption, material costs and shipping. They are drawing on a dedicated construction loan. Liquidity was $4 billion of cash and revolver availability at June 30.

How it fails or surprises you

The project takes longer and costs more again. The budget went up $600 million and the date moved to September 2027 in a single disclosure, with half the overrun attributed to a regional conflict that has not ended. A second increase of similar size, or a slip past 2027, arrives on a balance sheet already at 5.5 times earnings with negative book equity. The signal is the next two quarterly updates carrying any further change to either figure.

Macau earns too little for the capital behind it. Two resorts produced $297 million on $1.0 billion of revenue, a 29% margin, against one Las Vegas property at $215 million. Management also committed to an event centre and theatre at Wynn Palace as concession obligations, so Macau consumes capital while returning less per dollar than the Strip. Third-quarter volumes were already described as down slightly year over year. Macau below $280 million next quarter confirms trend rather than World Cup.

Al Marjan opens into an empty market (right tail). Nobody has operated a legal casino on the Arabian Peninsula before, so there is no comparable and consensus cannot model it with confidence. Wynn will be alone in a region with a very large concentration of wealth and no nearby alternative, at a property built to its usual standard. If it ramps at anything like the Macau properties' margin, it lands on a company currently valued at $8.5 billion of equity. The first reading is management's disclosure of preopening spend and hiring pace through 2027, ahead of any revenue at all.

The shape of the payoff

Nothing in the next four quarters settles this. The finished business does what it does, Las Vegas and Boston at or near records, Macau soft. The thing that decides the outcome opens in September 2027 and reports no revenue until then. What matters between here and there is whether the balance sheet survives in its present form: 5.5 times earnings, negative equity, a construction loan being drawn, and $4 billion of liquidity against a budget that has already moved once.

The downside tail is fatter than the multiple suggests, because leverage that high turns a delay into a financing event rather than an inconvenience. What is at risk is a forced equity raise at a depressed price, which is how this kind of setup usually resolves badly. What the upside is worth is a property nobody can model opening into a region with no competitor, on an equity base of $8.5 billion.

Closing thoughts

The bet is still that Wynn finishes the resort north of Dubai and opens it in September 2027 before the borrowing does damage. What breaks it is a second budget increase or a second delay, because the balance sheet has no room for either. The pair of numbers to watch together is the Al Marjan total budget against liquidity, disclosed each quarter. If the budget moves again while liquidity falls, the cheapest way to finish the building becomes selling shares at this price, and the holder who was paid $59 million to bet the stock stalls will have read it correctly.