Earnings: Will Wynn Buck the Trend?
By Bryan Bottarelli
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In this article:
The Dow surpassed the 13,000 level and the S&P500 and Nasdaq hit six-year highs.
Enjoy the upside of this market, but make sure to hedge yourself properly.
As far as earnings, will Wynn Resorts beat expectations based on Macau growth?
Earnings: Will WYNN Buck the Trend?
With the first trading week of May in the books now, let’s quickly review the significant events that took place in April. Among them, the Dow surpassed the 13,000 level and hit an all-time high of 13,284.
The S&P 500 and the Nasdaq each traded up to six-year highs (not to be confused with historic highs) but the Russell 3000 followed the Dow and registered an all-time high as well.
When you consider that it took the Dow seven years to move from 11,000 to 12,000, the last six months that witnessed a 1,000-point Dow run look rather impressive.
But before you pop open the bottle of vintage 1998 Dom Pérignon, do not lose sight of the downside threats we’re currently facing. After all, it was just this past February that one simple “bubble” comment regarding China sparked a 500-point Dow sell-off. Also remember that it was this month last year (May 2006) that sparked the last major market correction.
So enjoy the upside move -- and certainly prosper from it. But at the same time, remain protected via carefully placed put contracts.
Earnings: Resort and Casino Stocks Go Bust
As we lead into next week, it’ll be quite a thrill to watch the trading patterns of Wynn Resorts(WYNN:NASDAQ).
The Las Vegas and Macau hotel and casino empire is set to report earnings on Monday May 7 (time not supplied) and the consensus estimate is 55 cents per share.
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Now, we all know the statistics on Macau. There are 300 million people within a three-hour drive of this casino Mecca and nearly three billion people live within a five-hour flight of Macau. Add into the equation Chinese gamblers who redefine the concept “hardcore” and you have a stock that’s a moneymaking machine.
As a backdrop to the upcoming WYNN earnings, casino competitors have been missing earnings -- and these stocks have been falling.
Las Vegas Sands (LVS:NYSE), for example, said profits plunged 25% in the first quarter. Earnings came in at 26 cents per share versus 34 cents last year, and the stock has dropped $10 over the last six trading days. Las Vegas Sands owner Sheldon Adelson (who I’ve read makes $1 million per day!) should be getting concerned. He’s now only making $900,000 per day.
Poor fella.
At the same time, MGM Mirage (MGM:NYSE) also reported its first-quarter results below expectations, as earnings of 55 cents per share (which still came in above last year’s $0.48) still missed expectations of $0.63.
So as we approach Wynn Resorts’ (WYNN:NASDAQ) announcement on Monday, it would appear that the recent trend in the casino arena is earnings shortfalls.
Or will WYNN buck the trend and solidify itself as the premier leader of the three?
We’ll know next week! So stay tuned!
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Bryan Bottarelli is the head trading tactician for the WaveStrength Group, and is a contributing editor for Taipan Financial News. Coming off the floor of the Chicago Board Options Exchange (CBOE), Bryan uses WaveStrength chart forecasting to develop wining options plays for his service called WaveStrength Options Weekly. Bryan is also the lead editor of BottarelliResearch, an elite membership service that he independently publishes himself.
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