Intrinsic value of Wynn Resorts - WYNN

Previous Close

$134.14

  Intrinsic Value

$165.32

stock screener

  Rating & Target

buy

+23%

  Value-price divergence*

+77%

Previous close

$134.14

 
Intrinsic value

$165.32

 
Up/down potential

+23%

 
Rating

buy

 
Value-price divergence*

+77%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of WYNN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.57
  47.90
  43.61
  39.75
  36.27
  33.15
  30.33
  27.80
  25.52
  23.47
  21.62
  19.96
  18.46
  17.12
  15.90
  14.81
  13.83
  12.95
  12.15
  11.44
  10.80
  10.22
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.25
  7.02
Revenue, $m
  4,466
  6,605
  9,486
  13,256
  18,065
  24,053
  31,348
  40,063
  50,286
  62,087
  75,511
  90,581
  107,305
  125,671
  145,659
  167,237
  190,371
  215,023
  241,158
  268,744
  297,755
  328,173
  359,986
  393,193
  427,803
  463,832
  501,309
  540,270
  580,761
  622,838
  666,565
Variable operating expenses, $m
 
  5,740
  8,243
  11,520
  15,698
  20,902
  27,242
  34,815
  43,699
  53,954
  65,619
  78,715
  93,248
  109,208
  126,578
  145,329
  165,432
  186,855
  209,566
  233,538
  258,749
  285,182
  312,828
  341,685
  371,761
  403,070
  435,638
  469,494
  504,681
  541,246
  579,245
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,945
  5,740
  8,243
  11,520
  15,698
  20,902
  27,242
  34,815
  43,699
  53,954
  65,619
  78,715
  93,248
  109,208
  126,578
  145,329
  165,432
  186,855
  209,566
  233,538
  258,749
  285,182
  312,828
  341,685
  371,761
  403,070
  435,638
  469,494
  504,681
  541,246
  579,245
Operating income, $m
  522
  865
  1,243
  1,737
  2,366
  3,151
  4,107
  5,248
  6,588
  8,133
  9,892
  11,866
  14,057
  16,463
  19,081
  21,908
  24,939
  28,168
  31,592
  35,205
  39,006
  42,991
  47,158
  51,508
  56,042
  60,762
  65,671
  70,775
  76,080
  81,592
  87,320
EBITDA, $m
  927
  1,464
  2,103
  2,939
  4,005
  5,333
  6,950
  8,882
  11,149
  13,765
  16,742
  20,083
  23,791
  27,863
  32,294
  37,078
  42,207
  47,673
  53,467
  59,583
  66,015
  72,759
  79,813
  87,175
  94,848
  102,837
  111,146
  119,784
  128,761
  138,090
  147,785
Interest expense (income), $m
  265
  354
  498
  740
  1,058
  1,463
  1,967
  2,582
  3,316
  4,177
  5,171
  6,301
  7,571
  8,979
  10,526
  12,210
  14,027
  15,975
  18,052
  20,253
  22,576
  25,020
  27,582
  30,261
  33,058
  35,973
  39,008
  42,164
  45,446
  48,856
  52,400
Earnings before tax, $m
  311
  511
  745
  996
  1,308
  1,688
  2,139
  2,666
  3,272
  3,957
  4,721
  5,565
  6,486
  7,484
  8,555
  9,698
  10,912
  12,193
  13,540
  14,953
  16,430
  17,971
  19,576
  21,247
  22,984
  24,789
  26,664
  28,611
  30,634
  32,736
  34,920
Tax expense, $m
  9
  138
  201
  269
  353
  456
  578
  720
  883
  1,068
  1,275
  1,502
  1,751
  2,021
  2,310
  2,619
  2,946
  3,292
  3,656
  4,037
  4,436
  4,852
  5,286
  5,737
  6,206
  6,693
  7,199
  7,725
  8,271
  8,839
  9,428
Net income, $m
  242
  373
  544
  727
  955
  1,232
  1,562
  1,946
  2,388
  2,888
  3,446
  4,062
  4,735
  5,463
  6,245
  7,080
  7,965
  8,901
  9,884
  10,915
  11,994
  13,119
  14,291
  15,510
  16,778
  18,096
  19,465
  20,886
  22,363
  23,897
  25,492

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,627
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  11,954
  17,661
  25,363
  35,444
  48,302
  64,312
  83,819
  107,120
  134,456
  166,009
  201,900
  242,196
  286,912
  336,020
  389,463
  447,158
  509,012
  574,927
  644,806
  718,566
  796,136
  877,467
  962,529
  1,051,319
  1,143,858
  1,240,194
  1,340,399
  1,444,572
  1,552,837
  1,665,343
  1,782,260
Adjusted assets (=assets-cash), $m
  9,327
  17,661
  25,363
  35,444
  48,302
  64,312
  83,819
  107,120
  134,456
  166,009
  201,900
  242,196
  286,912
  336,020
  389,463
  447,158
  509,012
  574,927
  644,806
  718,566
  796,136
  877,467
  962,529
  1,051,319
  1,143,858
  1,240,194
  1,340,399
  1,444,572
  1,552,837
  1,665,343
  1,782,260
Revenue / Adjusted assets
  0.479
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
Average production assets, $m
  7,981
  11,804
  16,951
  23,689
  32,282
  42,982
  56,020
  71,592
  89,862
  110,950
  134,938
  161,869
  191,754
  224,575
  260,293
  298,853
  340,192
  384,245
  430,948
  480,245
  532,088
  586,444
  643,295
  702,636
  764,484
  828,869
  895,839
  965,462
  1,037,820
  1,113,012
  1,191,152
Working capital, $m
  1,574
  -661
  -949
  -1,326
  -1,806
  -2,405
  -3,135
  -4,006
  -5,029
  -6,209
  -7,551
  -9,058
  -10,730
  -12,567
  -14,566
  -16,724
  -19,037
  -21,502
  -24,116
  -26,874
  -29,775
  -32,817
  -35,999
  -39,319
  -42,780
  -46,383
  -50,131
  -54,027
  -58,076
  -62,284
  -66,657
Total debt, $m
  10,125
  14,224
  21,156
  30,229
  41,800
  56,210
  73,766
  94,737
  119,339
  147,737
  180,039
  216,306
  256,549
  300,747
  348,845
  400,771
  456,440
  515,763
  578,655
  645,038
  714,852
  788,049
  864,605
  944,516
  1,027,801
  1,114,503
  1,204,688
  1,298,444
  1,395,882
  1,497,137
  1,602,363
Total liabilities, $m
  11,796
  15,895
  22,827
  31,900
  43,471
  57,881
  75,437
  96,408
  121,010
  149,408
  181,710
  217,977
  258,220
  302,418
  350,516
  402,442
  458,111
  517,434
  580,326
  646,709
  716,523
  789,720
  866,276
  946,187
  1,029,472
  1,116,174
  1,206,359
  1,300,115
  1,397,553
  1,498,808
  1,604,034
Total equity, $m
  158
  1,766
  2,536
  3,544
  4,830
  6,431
  8,382
  10,712
  13,446
  16,601
  20,190
  24,220
  28,691
  33,602
  38,946
  44,716
  50,901
  57,493
  64,481
  71,857
  79,614
  87,747
  96,253
  105,132
  114,386
  124,019
  134,040
  144,457
  155,284
  166,534
  178,226
Total liabilities and equity, $m
  11,954
  17,661
  25,363
  35,444
  48,301
  64,312
  83,819
  107,120
  134,456
  166,009
  201,900
  242,197
  286,911
  336,020
  389,462
  447,158
  509,012
  574,927
  644,807
  718,566
  796,137
  877,467
  962,529
  1,051,319
  1,143,858
  1,240,193
  1,340,399
  1,444,572
  1,552,837
  1,665,342
  1,782,260
Debt-to-equity ratio
  64.082
  8.050
  8.340
  8.530
  8.650
  8.740
  8.800
  8.840
  8.880
  8.900
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  -0.265
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  242
  373
  544
  727
  955
  1,232
  1,562
  1,946
  2,388
  2,888
  3,446
  4,062
  4,735
  5,463
  6,245
  7,080
  7,965
  8,901
  9,884
  10,915
  11,994
  13,119
  14,291
  15,510
  16,778
  18,096
  19,465
  20,886
  22,363
  23,897
  25,492
Depreciation, amort., depletion, $m
  405
  599
  860
  1,202
  1,639
  2,182
  2,844
  3,634
  4,562
  5,632
  6,850
  8,217
  9,734
  11,400
  13,213
  15,170
  17,269
  19,505
  21,876
  24,378
  27,010
  29,769
  32,655
  35,667
  38,806
  42,075
  45,474
  49,008
  52,681
  56,498
  60,465
Funds from operations, $m
  1,175
  972
  1,404
  1,930
  2,594
  3,414
  4,405
  5,581
  6,950
  8,520
  10,296
  12,279
  14,469
  16,863
  19,458
  22,250
  25,234
  28,405
  31,760
  35,293
  39,003
  42,887
  46,945
  51,177
  55,585
  60,171
  64,939
  69,894
  75,044
  80,395
  85,956
Change in working capital, $m
  204
  -214
  -288
  -377
  -481
  -599
  -730
  -871
  -1,022
  -1,180
  -1,342
  -1,507
  -1,672
  -1,837
  -1,999
  -2,158
  -2,313
  -2,465
  -2,613
  -2,759
  -2,901
  -3,042
  -3,181
  -3,321
  -3,461
  -3,603
  -3,748
  -3,896
  -4,049
  -4,208
  -4,373
Cash from operations, $m
  971
  1,186
  1,692
  2,307
  3,075
  4,013
  5,135
  6,452
  7,972
  9,700
  11,638
  13,786
  16,141
  18,700
  21,457
  24,408
  27,547
  30,871
  34,373
  38,052
  41,904
  45,929
  50,127
  54,498
  59,046
  63,773
  68,686
  73,791
  79,093
  84,603
  90,329
Maintenance CAPEX, $m
  0
  -405
  -599
  -860
  -1,202
  -1,639
  -2,182
  -2,844
  -3,634
  -4,562
  -5,632
  -6,850
  -8,217
  -9,734
  -11,400
  -13,213
  -15,170
  -17,269
  -19,505
  -21,876
  -24,378
  -27,010
  -29,769
  -32,655
  -35,667
  -38,806
  -42,075
  -45,474
  -49,008
  -52,681
  -56,498
New CAPEX, $m
  -1,226
  -3,823
  -5,148
  -6,738
  -8,593
  -10,700
  -13,037
  -15,573
  -18,270
  -21,088
  -23,988
  -26,931
  -29,885
  -32,821
  -35,718
  -38,560
  -41,339
  -44,053
  -46,703
  -49,296
  -51,843
  -54,356
  -56,850
  -59,342
  -61,847
  -64,385
  -66,971
  -69,623
  -72,358
  -75,192
  -78,141
Cash from investing activities, $m
  -1,288
  -4,228
  -5,747
  -7,598
  -9,795
  -12,339
  -15,219
  -18,417
  -21,904
  -25,650
  -29,620
  -33,781
  -38,102
  -42,555
  -47,118
  -51,773
  -56,509
  -61,322
  -66,208
  -71,172
  -76,221
  -81,366
  -86,619
  -91,997
  -97,514
  -103,191
  -109,046
  -115,097
  -121,366
  -127,873
  -134,639
Free cash flow, $m
  -317
  -3,042
  -4,054
  -5,292
  -6,721
  -8,326
  -10,084
  -11,964
  -13,931
  -15,949
  -17,981
  -19,995
  -21,961
  -23,855
  -25,661
  -27,365
  -28,962
  -30,451
  -31,835
  -33,120
  -34,317
  -35,437
  -36,492
  -37,498
  -38,469
  -39,418
  -40,359
  -41,306
  -42,273
  -43,270
  -44,310
Issuance/(repayment) of debt, $m
  1,014
  4,099
  6,932
  9,073
  11,571
  14,409
  17,556
  20,971
  24,602
  28,398
  32,302
  36,266
  40,244
  44,198
  48,098
  51,926
  55,669
  59,323
  62,892
  66,384
  69,813
  73,197
  76,556
  79,911
  83,285
  86,702
  90,184
  93,756
  97,439
  101,255
  105,226
Issuance/(repurchase) of shares, $m
  -11
  1,235
  226
  281
  331
  369
  389
  384
  345
  267
  143
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,017
  5,334
  7,158
  9,354
  11,902
  14,778
  17,945
  21,355
  24,947
  28,665
  32,445
  36,266
  40,244
  44,198
  48,098
  51,926
  55,669
  59,323
  62,892
  66,384
  69,813
  73,197
  76,556
  79,911
  83,285
  86,702
  90,184
  93,756
  97,439
  101,255
  105,226
Total cash flow (excl. dividends), $m
  698
  2,292
  3,104
  4,063
  5,181
  6,452
  7,861
  9,390
  11,016
  12,715
  14,464
  16,271
  18,283
  20,342
  22,438
  24,561
  26,706
  28,872
  31,057
  33,264
  35,496
  37,761
  40,064
  42,413
  44,817
  47,284
  49,826
  52,449
  55,166
  57,985
  60,916
Retained Cash Flow (-), $m
  -270
  -1,608
  -770
  -1,008
  -1,286
  -1,601
  -1,951
  -2,330
  -2,734
  -3,155
  -3,589
  -4,030
  -4,472
  -4,911
  -5,344
  -5,770
  -6,185
  -6,591
  -6,988
  -7,376
  -7,757
  -8,133
  -8,506
  -8,879
  -9,254
  -9,634
  -10,020
  -10,417
  -10,827
  -11,251
  -11,692
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  684
  2,334
  3,055
  3,896
  4,851
  5,910
  7,060
  8,282
  9,560
  10,875
  12,242
  13,812
  15,432
  17,093
  18,791
  20,521
  22,280
  24,069
  25,888
  27,739
  29,628
  31,557
  33,534
  35,563
  37,651
  39,805
  42,032
  44,339
  46,734
  49,225
Discount rate, %
 
  11.20
  11.76
  12.35
  12.97
  13.61
  14.29
  15.01
  15.76
  16.55
  17.37
  18.24
  19.16
  20.11
  21.12
  22.18
  23.28
  24.45
  25.67
  26.95
  28.30
  29.72
  31.20
  32.76
  34.40
  36.12
  37.93
  39.82
  41.81
  43.91
  46.10
PV of cash for distribution, $m
 
  615
  1,868
  2,154
  2,392
  2,563
  2,651
  2,653
  2,569
  2,410
  2,191
  1,938
  1,686
  1,425
  1,169
  932
  721
  541
  394
  278
  190
  126
  80
  50
  29
  17
  9
  5
  3
  1
  1
Current shareholders' claim on cash, %
  100
  56.1
  55.4
  54.8
  54.3
  53.9
  53.6
  53.3
  53.2
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0
  53.0

Wynn Resorts, Limited develops, owns, and operates destination casino resorts. As of February 15, 2017, the company’s Wynn Macau resorts had approximately 284,000 square feet of casino space, which offered 303 table games and 957 slot machines, private gaming salons, sky casinos, and a poker pit; 2 luxury hotel towers with a total of 1,008 guest rooms and suites; 8 food and beverage outlets; 57,000 square feet of retail space; 31,000 square feet of meeting and convention space; recreation and leisure facilities comprising 2 health clubs, spas, a salon, and a pool; and the Rotunda show. It also owned and operated Wynn Palace resort with a total of approximately 420,000 square feet of casino space that offers 304 table games and 996 slot machines, private gaming salons, sky casinos, and a poker pit; a luxury hotel with a total of 1,706 guest rooms, suites, and villas; 10 food and beverage outlets; 105,000 square feet of retail space; 40,000 square feet of meeting and convention space; recreation and leisure facilities, including a gondola ride, health club, spa, salon, and pool; and public attractions, such as a performance lake and floral art displays. The company’s Las Vegas resorts offer approximately 189,000 square feet of casino space, which provide 234 table games and 1,907 slot machines, private gaming salons, a sky casino, a poker room, and a race and sports book; 2 luxury hotel towers with a total of 4,748 guest rooms, suites, and villas; 33 food and beverage outlets; 99,000 square feet of retail space; 290,000 square feet of meeting and convention space; 3 nightclubs and a beach club; recreation and leisure facilities, including an 18-hole golf course, swimming pools, private cabanas, 2 full service spas and salons, and a wedding chapel; and Le Rêve-The Dream, a water-based theatrical production and a theater presenting entertainment productions and various headliner entertainment acts. The company was founded in 2002 and is based in Las Vegas, Nevada.

FINANCIAL RATIOS  of  Wynn Resorts (WYNN)

Valuation Ratios
P/E Ratio 56.4
Price to Sales 3.1
Price to Book 86.4
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow -53.6
Growth Rates
Sales Growth Rate 9.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.2%
Cap. Spend. - 3 Yr. Gr. Rate 19.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 6408.2%
Total Debt to Equity 6408.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 2.5%
Ret/ On T. Cap. - 3 Yr. Avg. 5.2%
Return On Equity 1052.2%
Return On Equity - 3 Yr. Avg. 30.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 37.9%
Gross Margin - 3 Yr. Avg. 38.2%
EBITDA Margin 22%
EBITDA Margin - 3 Yr. Avg. 24.3%
Operating Margin 11.7%
Oper. Margin - 3 Yr. Avg. 16%
Pre-Tax Margin 7%
Pre-Tax Margin - 3 Yr. Avg. 10.6%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 7.9%
Effective Tax Rate 2.9%
Eff/ Tax Rate - 3 Yr. Avg. 1.6%
Payout Ratio 134.3%

WYNN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WYNN stock intrinsic value calculation we used $4466 million for the last fiscal year's total revenue generated by Wynn Resorts. The default revenue input number comes from 2016 income statement of Wynn Resorts. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WYNN stock valuation model: a) initial revenue growth rate of 47.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.2%, whose default value for WYNN is calculated based on our internal credit rating of Wynn Resorts, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Wynn Resorts.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WYNN stock the variable cost ratio is equal to 86.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for WYNN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Wynn Resorts.

Corporate tax rate of 27% is the nominal tax rate for Wynn Resorts. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WYNN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WYNN are equal to 178.7%.

Life of production assets of 19.7 years is the average useful life of capital assets used in Wynn Resorts operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WYNN is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $158 million for Wynn Resorts - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 102.619 million for Wynn Resorts is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Wynn Resorts at the current share price and the inputted number of shares is $13.8 billion.

RELATED COMPANIES Price Int.Val. Rating
LVS Las Vegas Sand 62.36 39.75  sell
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Stock chart of WYNN Financial statements of WYNN Annual reports of WYNN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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