With shares of Wynn Resorts (NASDAQ:WYNN) trading at around $113.75, is WYNN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Wynn Resorts wants to remove its former largest shareholder, Kazuo Okada, from its board due to unquestionable practices. Apparently, Okada made improper payments to overseas gambling regulators. Of course, there will be a legal battle ahead, which could end up having detrimental effects on the stock price, but Wynn Resorts wouldn’t have made this move unless it was highly confident that it could win any legal battle thrown its way in regards to this situation.
Wynn is a loved stocked on the street. 16 analysts rate it a Buy, 10 rate it a Hold, and zero rate it a Sell. JPMorgan Chase & Co. (NYSE:JPM) recently stated that Wynn Resorts was seriously undervalued. Wynn Resorts is a company with an expected annual EPS growth of 32.30 percent over the next five years. Other positives include double-digit margins and over $1.3 billion in operating cash flow. But Wynn Resorts isn’t an impeccable piece of artwork. There are some concerns.
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The biggest concern is what will happen to the stock if we go over the fiscal cliff. Remember, this was one of the hardest hit stocks in 2008-2009. Even if we don’t go over the cliff, Macau is a concern. Wynn Resorts has huge exposure in Macau, and if China continues to slow, it’s going to hurt. Another potential negative is that insiders have been selling, which isn’t always a negative, but it’s certainly not a positive. In addition to that, UBS (NYSE:UBS) just downgraded WYNN to neutral.
As you can see, beauty is in the eye of the beholder here, which is often the case. For a clearer picture, let’s take a look at some stats. After all, stats don’t lie, right?