Is Wynn Resorts Now a ?Value? Play?

[Stocks-to-Watch]

Wynn Resorts (WYNN) may not have the same growth prospects as its peers, but it’s throwing off tons of cash and offers a healthy dividend, writes CLSA analyst Jon Oh. That means the stock could become appealing to a new group of investors — those less interested in chasing growth and more interested in a steady cash flow.

One reason Wynn might not grow as fast as peers in the next few years is that it’s being less aggressive in Cotai, the new Macau gambling hotspot.

“Competition in the VIP space in Macau has stiffened as Galaxy, Sands China and Melco lead the charge on driving volumes into Cotai with high-quality products backed by strengthening junket relationships. Wynn remains an unwilling party to embrace the VIP commission game as a tool to claw back its fair share, and while we are unsure if that’s a good or a bad thing, one thing for certain is an absence in Cotai over the next “several” years will dampen the growth trajectory.”

But with the company’s “somewhat recurrent special dividend”, its yield has lately been 5% to 6%, more than enough for dividend-hungry investors.

Oh “raised” his rating to Buy (although it had been rated Outperform under CLSA’s old rating system).



Original Article Source by Barrons.com