Intrinsic value of Wynn Resorts - WYNN

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$115.90

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$115.90

 
Intrinsic value

$55.84

 
Up/down potential

-52%

 
Rating

str. sell

 
Value-price divergence* premium content

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*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 11.8

 

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
  37.30
  34.07
  31.16
  28.55
  26.19
  24.07
  22.17
  20.45
  18.90
  17.51
  16.26
  15.14
  14.12
  13.21
  12.39
  11.65
  10.99
  10.39
  9.85
  9.36
  8.93
  8.53
  8.18
  7.86
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
Revenue, $m
  4,466
  6,132
  8,221
  10,783
  13,861
  17,491
  21,702
  26,512
  31,934
  37,971
  44,621
  51,877
  59,730
  68,165
  77,170
  86,730
  96,835
  107,472
  118,635
  130,318
  142,520
  155,243
  168,492
  182,276
  196,608
  211,503
  226,983
  243,069
  259,788
  277,169
  295,244
Variable operating expenses, $m
 
  5,329
  7,144
  9,370
  12,045
  15,200
  18,859
  23,039
  27,751
  32,997
  38,776
  45,081
  51,905
  59,235
  67,060
  75,369
  84,149
  93,393
  103,094
  113,247
  123,850
  134,906
  146,419
  158,398
  170,852
  183,796
  197,248
  211,227
  225,756
  240,860
  256,567
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
  5,329
  7,144
  9,370
  12,045
  15,200
  18,859
  23,039
  27,751
  32,997
  38,776
  45,081
  51,905
  59,235
  67,060
  75,369
  84,149
  93,393
  103,094
  113,247
  123,850
  134,906
  146,419
  158,398
  170,852
  183,796
  197,248
  211,227
  225,756
  240,860
  256,567
Operating income, $m
  522
  803
  1,077
  1,413
  1,816
  2,291
  2,843
  3,473
  4,183
  4,974
  5,845
  6,796
  7,825
  8,930
  10,109
  11,362
  12,685
  14,079
  15,541
  17,072
  18,670
  20,337
  22,072
  23,878
  25,756
  27,707
  29,735
  31,842
  34,032
  36,309
  38,677
EBITDA, $m
  927
  1,359
  1,823
  2,391
  3,073
  3,878
  4,812
  5,878
  7,080
  8,419
  9,893
  11,502
  13,243
  15,113
  17,109
  19,229
  21,469
  23,828
  26,303
  28,893
  31,598
  34,419
  37,356
  40,412
  43,590
  46,893
  50,325
  53,891
  57,598
  61,451
  65,459
Interest expense (income), $m
  265
  354
  345
  482
  651
  853
  1,092
  1,369
  1,685
  2,042
  2,439
  2,876
  3,353
  3,869
  4,424
  5,016
  5,645
  6,310
  7,009
  7,743
  8,512
  9,314
  10,151
  11,022
  11,928
  12,871
  13,850
  14,868
  15,926
  17,026
  18,169
Earnings before tax, $m
  311
  449
  732
  930
  1,165
  1,438
  1,751
  2,104
  2,498
  2,933
  3,407
  3,920
  4,471
  5,060
  5,685
  6,345
  7,040
  7,769
  8,532
  9,328
  10,159
  11,023
  11,922
  12,856
  13,827
  14,836
  15,884
  16,974
  18,106
  19,283
  20,508
Tax expense, $m
  9
  121
  198
  251
  315
  388
  473
  568
  675
  792
  920
  1,058
  1,207
  1,366
  1,535
  1,713
  1,901
  2,098
  2,304
  2,519
  2,743
  2,976
  3,219
  3,471
  3,733
  4,006
  4,289
  4,583
  4,889
  5,207
  5,537
Net income, $m
  242
  328
  534
  679
  851
  1,050
  1,278
  1,536
  1,824
  2,141
  2,487
  2,862
  3,264
  3,694
  4,150
  4,632
  5,139
  5,672
  6,228
  6,810
  7,416
  8,047
  8,703
  9,385
  10,094
  10,830
  11,596
  12,391
  13,217
  14,077
  14,971

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
  12,801
  17,163
  22,511
  28,937
  36,517
  45,307
  55,350
  66,668
  79,271
  93,154
  108,303
  124,696
  142,307
  161,106
  181,065
  202,160
  224,368
  247,672
  272,063
  297,537
  324,098
  351,757
  380,534
  410,454
  441,552
  473,868
  507,451
  542,355
  578,640
  616,376
Adjusted assets (=assets-cash), $m
  9,327
  12,801
  17,163
  22,511
  28,937
  36,517
  45,307
  55,350
  66,668
  79,271
  93,154
  108,303
  124,696
  142,307
  161,106
  181,065
  202,160
  224,368
  247,672
  272,063
  297,537
  324,098
  351,757
  380,534
  410,454
  441,552
  473,868
  507,451
  542,355
  578,640
  616,376
Revenue / Adjusted assets
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
  0.479
Average production assets, $m
  7,981
  10,958
  14,691
  19,269
  24,770
  31,257
  38,782
  47,378
  57,066
  67,854
  79,738
  92,705
  106,737
  121,811
  137,902
  154,987
  173,043
  192,053
  212,001
  232,879
  254,684
  277,419
  301,095
  325,727
  351,338
  377,957
  405,618
  434,364
  464,241
  495,301
  527,601
Working capital, $m
  1,574
  -1,447
  -1,940
  -2,545
  -3,271
  -4,128
  -5,122
  -6,257
  -7,536
  -8,961
  -10,531
  -12,243
  -14,096
  -16,087
  -18,212
  -20,468
  -22,853
  -25,363
  -27,998
  -30,755
  -33,635
  -36,637
  -39,764
  -43,017
  -46,399
  -49,915
  -53,568
  -57,364
  -61,310
  -65,412
  -69,678
Total debt, $m
  10,125
  9,850
  13,775
  18,589
  24,373
  31,194
  39,105
  48,144
  58,330
  69,673
  82,168
  95,802
  110,556
  126,405
  143,324
  161,288
  180,273
  200,260
  221,234
  243,186
  266,112
  290,017
  314,910
  340,809
  367,738
  395,726
  424,810
  455,035
  486,448
  519,105
  553,067
Total liabilities, $m
  11,796
  11,521
  15,446
  20,260
  26,044
  32,865
  40,776
  49,815
  60,001
  71,344
  83,839
  97,473
  112,227
  128,076
  144,995
  162,959
  181,944
  201,931
  222,905
  244,857
  267,783
  291,688
  316,581
  342,480
  369,409
  397,397
  426,481
  456,706
  488,119
  520,776
  554,738
Total equity, $m
  158
  1,280
  1,716
  2,251
  2,894
  3,652
  4,531
  5,535
  6,667
  7,927
  9,315
  10,830
  12,470
  14,231
  16,111
  18,107
  20,216
  22,437
  24,767
  27,206
  29,754
  32,410
  35,176
  38,053
  41,045
  44,155
  47,387
  50,745
  54,235
  57,864
  61,638
Total liabilities and equity, $m
  11,954
  12,801
  17,162
  22,511
  28,938
  36,517
  45,307
  55,350
  66,668
  79,271
  93,154
  108,303
  124,697
  142,307
  161,106
  181,066
  202,160
  224,368
  247,672
  272,063
  297,537
  324,098
  351,757
  380,533
  410,454
  441,552
  473,868
  507,451
  542,354
  578,640
  616,376
Debt-to-equity ratio
  64.082
  7.690
  8.030
  8.260
  8.420
  8.540
  8.630
  8.700
  8.750
  8.790
  8.820
  8.850
  8.870
  8.880
  8.900
  8.910
  8.920
  8.930
  8.930
  8.940
  8.940
  8.950
  8.950
  8.960
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
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
  328
  534
  679
  851
  1,050
  1,278
  1,536
  1,824
  2,141
  2,487
  2,862
  3,264
  3,694
  4,150
  4,632
  5,139
  5,672
  6,228
  6,810
  7,416
  8,047
  8,703
  9,385
  10,094
  10,830
  11,596
  12,391
  13,217
  14,077
  14,971
Depreciation, amort., depletion, $m
  405
  556
  746
  978
  1,257
  1,587
  1,969
  2,405
  2,897
  3,444
  4,048
  4,706
  5,418
  6,183
  7,000
  7,867
  8,784
  9,749
  10,761
  11,821
  12,928
  14,082
  15,284
  16,534
  17,834
  19,186
  20,590
  22,049
  23,566
  25,142
  26,782
Funds from operations, $m
  1,175
  884
  1,280
  1,657
  2,108
  2,637
  3,247
  3,941
  4,721
  5,585
  6,535
  7,567
  8,682
  9,877
  11,150
  12,499
  13,923
  15,420
  16,990
  18,631
  20,344
  22,129
  23,987
  25,919
  27,928
  30,016
  32,185
  34,440
  36,783
  39,219
  41,753
Change in working capital, $m
  204
  -393
  -493
  -605
  -726
  -857
  -994
  -1,135
  -1,279
  -1,425
  -1,569
  -1,713
  -1,853
  -1,991
  -2,125
  -2,256
  -2,385
  -2,510
  -2,634
  -2,757
  -2,880
  -3,003
  -3,127
  -3,253
  -3,382
  -3,515
  -3,653
  -3,796
  -3,946
  -4,102
  -4,266
Cash from operations, $m
  971
  1,670
  1,773
  2,262
  2,834
  3,493
  4,241
  5,076
  6,000
  7,010
  8,104
  9,280
  10,535
  11,868
  13,275
  14,756
  16,308
  17,931
  19,624
  21,388
  23,224
  25,131
  27,114
  29,172
  31,311
  33,531
  35,839
  38,236
  40,729
  43,321
  46,019
Maintenance CAPEX, $m
  0
  -405
  -556
  -746
  -978
  -1,257
  -1,587
  -1,969
  -2,405
  -2,897
  -3,444
  -4,048
  -4,706
  -5,418
  -6,183
  -7,000
  -7,867
  -8,784
  -9,749
  -10,761
  -11,821
  -12,928
  -14,082
  -15,284
  -16,534
  -17,834
  -19,186
  -20,590
  -22,049
  -23,566
  -25,142
New CAPEX, $m
  -1,226
  -2,977
  -3,733
  -4,578
  -5,501
  -6,488
  -7,524
  -8,596
  -9,688
  -10,788
  -11,884
  -12,967
  -14,032
  -15,074
  -16,091
  -17,085
  -18,056
  -19,009
  -19,948
  -20,878
  -21,805
  -22,735
  -23,676
  -24,632
  -25,611
  -26,619
  -27,662
  -28,746
  -29,877
  -31,060
  -32,300
Cash from investing activities, $m
  -1,288
  -3,382
  -4,289
  -5,324
  -6,479
  -7,745
  -9,111
  -10,565
  -12,093
  -13,685
  -15,328
  -17,015
  -18,738
  -20,492
  -22,274
  -24,085
  -25,923
  -27,793
  -29,697
  -31,639
  -33,626
  -35,663
  -37,758
  -39,916
  -42,145
  -44,453
  -46,848
  -49,336
  -51,926
  -54,626
  -57,442
Free cash flow, $m
  -317
  -1,712
  -2,516
  -3,062
  -3,644
  -4,252
  -4,870
  -5,488
  -6,093
  -6,675
  -7,224
  -7,735
  -8,202
  -8,624
  -8,999
  -9,329
  -9,616
  -9,862
  -10,073
  -10,251
  -10,403
  -10,532
  -10,644
  -10,744
  -10,835
  -10,922
  -11,009
  -11,100
  -11,197
  -11,304
  -11,424
Issuance/(repayment) of debt, $m
  1,014
  -275
  3,925
  4,814
  5,784
  6,821
  7,912
  9,038
  10,187
  11,343
  12,495
  13,634
  14,754
  15,849
  16,919
  17,964
  18,985
  19,987
  20,974
  21,952
  22,927
  23,905
  24,893
  25,899
  26,928
  27,988
  29,085
  30,224
  31,413
  32,657
  33,962
Issuance/(repurchase) of shares, $m
  -11
  3,109
  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 from financing (excl. dividends), $m  
  1,017
  2,834
  3,925
  4,814
  5,784
  6,821
  7,912
  9,038
  10,187
  11,343
  12,495
  13,634
  14,754
  15,849
  16,919
  17,964
  18,985
  19,987
  20,974
  21,952
  22,927
  23,905
  24,893
  25,899
  26,928
  27,988
  29,085
  30,224
  31,413
  32,657
  33,962
Total cash flow (excl. dividends), $m
  698
  -1,986
  1,409
  1,752
  2,139
  2,570
  3,041
  3,550
  4,093
  4,668
  5,271
  5,899
  6,551
  7,225
  7,920
  8,634
  9,369
  10,125
  10,901
  11,701
  12,524
  13,373
  14,249
  15,155
  16,094
  17,066
  18,076
  19,125
  20,216
  21,353
  22,538
Retained Cash Flow (-), $m
  -270
  -3,749
  -436
  -535
  -643
  -758
  -879
  -1,004
  -1,132
  -1,260
  -1,388
  -1,515
  -1,639
  -1,761
  -1,880
  -1,996
  -2,109
  -2,221
  -2,330
  -2,439
  -2,547
  -2,656
  -2,766
  -2,878
  -2,992
  -3,110
  -3,232
  -3,358
  -3,490
  -3,629
  -3,774
Prev. year cash balance distribution, $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
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
 
  0
  973
  1,217
  1,497
  1,812
  2,162
  2,546
  2,962
  3,408
  3,883
  4,384
  4,912
  5,464
  6,040
  6,638
  7,260
  7,904
  8,571
  9,262
  9,976
  10,717
  11,483
  12,278
  13,102
  13,956
  14,844
  15,767
  16,726
  17,724
  18,764
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
 
  0
  779
  858
  919
  957
  970
  957
  918
  859
  782
  694
  600
  504
  413
  329
  255
  192
  140
  99
  68
  45
  29
  18
  11
  6
  3
  2
  1
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

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 48.8
Price to Sales 2.6
Price to Book 74.7
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow -46.3
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 37.3% 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 -23.6%. 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 102.173 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 $11.8 billion.


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COMPANY NEWS

▶ [$$] A Change of Luck at MGM Resorts   [Apr-22-17 12:01AM  Barrons.com]
▶ Wynn Resorts Announces First Quarter Earnings Release Date   [Apr-21-17 04:05PM  Business Wire]
▶ The 3 Best Casino Stocks to Buy in 2017   [Apr-19-17 12:41PM  Motley Fool]
▶ Final Trade: WFT, ARNC & more   [Apr-18-17 05:59PM  CNBC Videos]
▶ Place Your Bets! Macau vs Las Vegas   [12:44PM  Barrons.com]
▶ Longleaf Partners 1st Quarter Commentary   [Apr-14-17 05:50PM  GuruFocus.com]
▶ Here's What Pushed Wynn Resorts Stock Higher in March   [Apr-06-17 08:21PM  Motley Fool]
▶ Whats Priced In to Macaos Casinos Valuations?   [07:36AM  Market Realist]
▶ Better Buy: Las Vegas Sands Corp. vs. Wynn Resorts   [Apr-05-17 07:49PM  Motley Fool]
▶ Is Oversupply a Concern for Macaos Casinos?   [09:06AM  Market Realist]
▶ Macau's Recovery Is Full Steam Ahead   [Apr-04-17 09:43PM  Motley Fool]
▶ Bet on casinos?   [Apr-03-17 05:14PM  CNBC Videos]
▶ Casino Stocks Rise As Macau Continues Hot Streak   [04:20PM  Investor's Business Daily]
▶ How to trade the recent market jitters in 3 plays   [Mar-22-17 06:43PM  at CNBC]
▶ Better Buy: Wynn Resorts Ltd. vs. Caesars Entertainment   [Mar-20-17 06:44PM  at Motley Fool]
▶ In Macau Casino Shuffle: MGM & Vegas, Baby!   [11:43AM  at Barrons.com]
▶ 3 High-Growth Stocks to Buy in March   [08:03AM  at Motley Fool]
▶ Wynn Resorts May Miss Another Growth Opportunity in Japan   [Mar-13-17 06:33PM  at Motley Fool]
▶ Wynn Resorts In Macau: Could Stock Double?   [05:32PM  at Barrons.com]
▶ [$$] Macau Casinos Face Impending Shuffling of Decks   [Mar-06-17 12:18AM  at The Wall Street Journal]
▶ Surging Macau Revenue Drives Gaming Stocks Higher   [Mar-04-17 12:00PM  at Motley Fool]
▶ These Are the Most Expensive Hotels in Las Vegas   [Mar-03-17 09:37AM  at Motley Fool]
▶ [$$] Macau Casinos Face Impending Shuffling of Decks   [Mar-02-17 08:39PM  at The Wall Street Journal]
▶ [$$] Gambling-Legalization Effort in Georgia Fails   [Feb-27-17 05:30PM  at The Wall Street Journal]
▶ Wynn Resorts Names a New CFO   [09:54AM  at Investopedia]
Stock chart of WYNN Financial statements 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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