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Why Wynn Macau moved on Macau's January gaming surprise
Positive January gross gaming revenue in Macau topped estimates, and that sector wide surprise helped lift Wynn Macau (SEHK:1128), which gained 0.86% even as the broader market weakened.
See our latest analysis for Wynn Macau.
At a share price of HK$6.07, Wynn Macau's recent 3.94% 1 day and 2.71% 7 day share price returns contrast with a weaker 90 day share price return of an 8.58% decline. The 1 year total shareholder return of 19.48% sits against a 5 year total shareholder return of a 52.59% decline, which highlights that short term momentum has picked up even as longer term investors have faced substantial volatility.
If you are looking beyond Macau's casino names, this could be a useful moment to widen your watchlist and check out fast growing stocks with high insider ownership as potential fresh ideas.
So with January's surprise gaming figures, a roughly 39% intrinsic discount and about 28% gap to analyst targets, is Wynn Macau still trading below what the market implies, or is future growth already priced in?
Price-to-Earnings of 17.3x: Is it justified?
On a P/E of 17.3x, Wynn Macau looks roughly in line with both its own fair ratio estimate of 17.5x and the broader Hong Kong hospitality space, even after the recent move in the share price to HK$6.07.
The P/E multiple tells you what investors are currently paying for each dollar of earnings, which is useful for a mature, profit generating casino and resort operator like Wynn Macau. Here, the stock is described as good value versus its estimated fair P/E of 17.5x and also versus the Hong Kong hospitality industry average of 17.4x. This suggests the market is not putting an especially rich or low price tag on its earnings.
There is a twist when you compare Wynn Macau to its closer peer group, where it screens as expensive on the same 17.3x P/E against a peer average of 15.1x. That gap points to a premium that the market is currently attaching to its earnings profile. The fair ratio implies a level the multiple could gravitate toward if sentiment or fundamentals shift closer to what the regression based model implies.
Explore the SWS fair ratio for Wynn Macau
Result: Price-to-Earnings of 17.3x (ABOUT RIGHT)
However, you still need to weigh risks, such as regulatory shifts in Macau or a reversal in recent earnings momentum, that could act as a brake on sentiment.
Find out about the key risks to this Wynn Macau narrative.
Another view on value: cash flows tell a stronger story
While the 17.3x P/E suggests Wynn Macau is roughly in line with its fair ratio of 17.5x, our DCF model points in a different direction. At HK$6.07, the shares are trading at a 38.8% discount to an estimated future cash flow value of HK$9.91. So is the market giving too little credit to those projected cash flows, or is the P/E sending the more grounded signal?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out Wynn Macau for example ). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 871 undervalued stocks based on their cash flows . If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Build Your Own Wynn Macau Narrative
If this view does not quite fit how you read the numbers, you can always test the inputs yourself and shape a version that reflects your own thesis. Then Do it your way in under three minutes.
A great starting point for your Wynn Macau research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 1128.HK .
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