Standard & Poor’s today lifted its corporate credit rating on Las Vegas-based Wynn Resorts Ltd., citing its strong financial profile and CEO Steve Wynn’s record of producing profits for shareholders.
The rating was raised to the upper end of the speculative grade scale, to "BB+," from "BB."
Companies at "BB," according to debt-rater Standard & Poor’s, are, "Less vulnerable in the near-term but face major ongoing uncertainties to adverse business, financial and economic conditions."
Wynn Resorts has now advanced past that level and Standard & Poor’s also assigned a positive rating outlook to Wynn’s debt.
Standard & Poor’s suggested Wynn could gain an investment-grade rating, which is rare for the casino industry, based on the company’s track record of profitability and keeping debt under control.
"Management has a track record of opportunistically returning significant capital to shareholders and has recently increased its quarterly dividend to 50 cents per common share from 25 cents," Standard & Poor’s analysts said in today’s report.
They noted Wynn is preparing to spend $2.5 billion to $3 billion on a resort in the Cotai district of Macau.
They projected Wynn’s Las Vegas Strip properties – Wynn Las Vegas and Encore – would produce net revenue growth of about 10 percent this year and about 7.5 percent in both 2012 and 2013.
"We believe the Las Vegas Strip should realize at least modest growth in gaming revenues over this timeframe, as the economy continues to gradually improve. Wynn also benefits from its focus on the high-end consumer segment and the associated strength of non-gaming revenues, which typically comprise more than half of total net revenues," today’s report said. "In addition, continued moderate growth in convention bookings should benefit the lodging side of the business."
In China, Wynn’s Macau properties should generate net revenue growth of 20 percent this year and 5 percent in 2012 and again in 2013, Standard & Poor's said in today’s report.
As of March 31, Wynn Resorts held cash or cash equivalents of $1.4 billion.
Total debt outstanding was just $3.2 billion vs. $10.1 billion at competitor Las Vegas Sands Corp.
In the first quarter, Wynn Resorts earned $173.8 million, or $1.39 per share, up from $27 million, or 22 cents per share in the year-ago quarter.
Net revenue in 2011’s first quarter was $1.26 billion.