WYNN: ESTIMATES AREN’T THE ONLY THING BEING CUT

Takeaway: DIVIDEND CUT COMPOUNDS A VERY BAD QUARTER

CALL TO ACTION

As if badly missing sharply (and recently) reduced estimates wasn’t bad enough, Wynn Resorts also cut its dividend.  WYNN traded down 10% after hours last night in response.  Contrast this stock action with LVS last week which held up (down only 2%) despite a quarter that revealed much more troubling trends (base mass) than anything in the WYNN release. The difference? LVS maintained the dividend. 

 

So where do we go from here? Beyond the initial reaction to the respective dividend policy decisions, let’s get back to earnings drivers. We wouldn’t be buyers of either stock but with WYNN down 10%, LVS looks like it has more downside. The biggest risk going forward, on the margin, is not VIP, it’s base mass. Yes, LVS has decided to do what it can to protect the dividend and that’s great.  WYNN, in typical fashion, is being more conservative. However, dividend cuts typically follow cash flow trends, albeit in a lumpy fashion. With with each passing day, the probability of an LVS dividend cut increases.  

 

Please see our detailed note:  

http://docs.hedgeye.com/HE_WYNN_Doom_4.29.15.pdf


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