Intrinsic value of Wynn Resorts - WYNN

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$125.73

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$125.73

 
Intrinsic value

$94.69

 
Up/down potential

-25%

 
Rating

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 12.9

 

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
  376
  565
  813
  1,129
  1,523
  2,003
  2,576
  3,248
  4,024
  4,907
  5,898
  6,998
  8,206
  9,520
  10,939
  12,461
  14,082
  15,801
  17,615
  19,522
  21,523
  23,615
  25,799
  28,075
  30,444
  32,909
  35,471
  38,134
  40,901
Earnings before tax, $m
  311
  511
  867
  1,171
  1,553
  2,021
  2,583
  3,245
  4,011
  4,885
  5,867
  6,959
  8,159
  9,465
  10,875
  12,388
  13,999
  15,707
  17,510
  19,405
  21,391
  23,468
  25,635
  27,893
  30,243
  32,687
  35,227
  37,867
  40,609
  43,458
  46,419
Tax expense, $m
  9
  138
  234
  316
  419
  546
  698
  876
  1,083
  1,319
  1,584
  1,879
  2,203
  2,556
  2,936
  3,345
  3,780
  4,241
  4,728
  5,239
  5,776
  6,336
  6,922
  7,531
  8,166
  8,826
  9,511
  10,224
  10,964
  11,734
  12,533
Net income, $m
  242
  373
  633
  855
  1,134
  1,476
  1,886
  2,369
  2,928
  3,566
  4,283
  5,080
  5,956
  6,909
  7,939
  9,043
  10,219
  11,466
  12,782
  14,166
  15,616
  17,132
  18,714
  20,362
  22,078
  23,862
  25,716
  27,643
  29,645
  31,725
  33,886

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
  13,790
  19,803
  27,675
  37,714
  50,214
  65,445
  83,639
  104,982
  129,618
  157,642
  189,105
  224,019
  262,362
  304,090
  349,138
  397,433
  448,899
  503,460
  561,051
  621,618
  685,120
  751,536
  820,863
  893,117
  968,335
  1,046,574
  1,127,912
  1,212,445
  1,300,288
  1,391,577
Adjusted assets (=assets-cash), $m
  9,327
  13,790
  19,803
  27,675
  37,714
  50,214
  65,445
  83,639
  104,982
  129,618
  157,642
  189,105
  224,019
  262,362
  304,090
  349,138
  397,433
  448,899
  503,460
  561,051
  621,618
  685,120
  751,536
  820,863
  893,117
  968,335
  1,046,574
  1,127,912
  1,212,445
  1,300,288
  1,391,577
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
  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
  -1,559
  -2,239
  -3,128
  -4,263
  -5,676
  -7,398
  -9,455
  -11,868
  -14,653
  -17,821
  -21,377
  -25,324
  -29,658
  -34,376
  -39,468
  -44,927
  -50,745
  -56,913
  -63,424
  -70,270
  -77,449
  -84,957
  -92,794
  -100,961
  -109,464
  -118,309
  -127,504
  -137,060
  -146,990
  -157,309
Total debt, $m
  10,125
  10,740
  16,152
  23,236
  32,271
  43,522
  57,230
  73,604
  92,813
  114,986
  140,207
  168,524
  199,946
  234,455
  272,010
  312,553
  356,019
  402,338
  451,443
  503,275
  557,785
  614,937
  674,712
  737,106
  802,134
  869,830
  940,246
  1,013,450
  1,089,529
  1,168,589
  1,250,748
Total liabilities, $m
  11,796
  12,411
  17,823
  24,907
  33,942
  45,193
  58,901
  75,275
  94,484
  116,657
  141,878
  170,195
  201,617
  236,126
  273,681
  314,224
  357,690
  404,009
  453,114
  504,946
  559,456
  616,608
  676,383
  738,777
  803,805
  871,501
  941,917
  1,015,121
  1,091,200
  1,170,260
  1,252,419
Total equity, $m
  158
  1,379
  1,980
  2,767
  3,771
  5,021
  6,545
  8,364
  10,498
  12,962
  15,764
  18,911
  22,402
  26,236
  30,409
  34,914
  39,743
  44,890
  50,346
  56,105
  62,162
  68,512
  75,154
  82,086
  89,312
  96,833
  104,657
  112,791
  121,244
  130,029
  139,158
Total liabilities and equity, $m
  11,954
  13,790
  19,803
  27,674
  37,713
  50,214
  65,446
  83,639
  104,982
  129,619
  157,642
  189,106
  224,019
  262,362
  304,090
  349,138
  397,433
  448,899
  503,460
  561,051
  621,618
  685,120
  751,537
  820,863
  893,117
  968,334
  1,046,574
  1,127,912
  1,212,444
  1,300,289
  1,391,577
Debt-to-equity ratio
  64.082
  7.790
  8.160
  8.400
  8.560
  8.670
  8.740
  8.800
  8.840
  8.870
  8.890
  8.910
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  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
  633
  855
  1,134
  1,476
  1,886
  2,369
  2,928
  3,566
  4,283
  5,080
  5,956
  6,909
  7,939
  9,043
  10,219
  11,466
  12,782
  14,166
  15,616
  17,132
  18,714
  20,362
  22,078
  23,862
  25,716
  27,643
  29,645
  31,725
  33,886
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
  1,493
  2,057
  2,773
  3,657
  4,729
  6,003
  7,490
  9,198
  11,133
  13,297
  15,689
  18,309
  21,152
  24,213
  27,488
  30,971
  34,658
  38,543
  42,625
  46,900
  51,368
  56,029
  60,884
  65,936
  71,190
  76,651
  82,326
  88,223
  94,351
Change in working capital, $m
  204
  -505
  -680
  -890
  -1,135
  -1,413
  -1,722
  -2,057
  -2,413
  -2,785
  -3,168
  -3,557
  -3,947
  -4,335
  -4,717
  -5,092
  -5,459
  -5,818
  -6,168
  -6,510
  -6,847
  -7,179
  -7,508
  -7,837
  -8,168
  -8,503
  -8,844
  -9,195
  -9,556
  -9,930
  -10,320
Cash from operations, $m
  971
  1,870
  2,173
  2,947
  3,907
  5,071
  6,451
  8,060
  9,903
  11,983
  14,301
  16,853
  19,636
  22,644
  25,869
  29,306
  32,948
  36,789
  40,826
  45,054
  49,472
  54,079
  58,876
  63,866
  69,052
  74,439
  80,035
  85,846
  91,882
  98,153
  104,670
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
  -2,358
  -3,574
  -4,651
  -5,888
  -7,268
  -8,768
  -10,357
  -12,001
  -13,666
  -15,319
  -16,928
  -18,465
  -19,911
  -21,249
  -22,467
  -23,562
  -24,533
  -25,382
  -26,118
  -26,749
  -27,287
  -27,743
  -28,130
  -28,462
  -28,752
  -29,011
  -29,251
  -29,484
  -29,720
  -29,968
Issuance/(repayment) of debt, $m
  1,014
  615
  5,412
  7,084
  9,035
  11,251
  13,708
  16,374
  19,209
  22,173
  25,222
  28,316
  31,422
  34,509
  37,555
  40,543
  43,466
  46,319
  49,105
  51,832
  54,510
  57,152
  59,774
  62,394
  65,029
  67,696
  70,415
  73,204
  76,079
  79,059
  82,160
Issuance/(repurchase) of shares, $m
  -11
  2,964
  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
  3,579
  5,412
  7,084
  9,035
  11,251
  13,708
  16,374
  19,209
  22,173
  25,222
  28,316
  31,422
  34,509
  37,555
  40,543
  43,466
  46,319
  49,105
  51,832
  54,510
  57,152
  59,774
  62,394
  65,029
  67,696
  70,415
  73,204
  76,079
  79,059
  82,160
Total cash flow (excl. dividends), $m
  698
  -1,743
  1,839
  2,433
  3,147
  3,982
  4,940
  6,017
  7,208
  8,506
  9,903
  11,389
  12,957
  14,598
  16,306
  18,076
  19,904
  21,786
  23,723
  25,714
  27,760
  29,865
  32,032
  34,264
  36,566
  38,945
  41,405
  43,953
  46,595
  49,339
  52,192
Retained Cash Flow (-), $m
  -270
  -3,848
  -601
  -787
  -1,004
  -1,250
  -1,523
  -1,819
  -2,134
  -2,464
  -2,802
  -3,146
  -3,491
  -3,834
  -4,173
  -4,505
  -4,830
  -5,147
  -5,456
  -5,759
  -6,057
  -6,350
  -6,642
  -6,933
  -7,225
  -7,522
  -7,824
  -8,134
  -8,453
  -8,784
  -9,129
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
  1,237
  1,646
  2,143
  2,732
  3,417
  4,198
  5,074
  6,042
  7,100
  8,243
  9,465
  10,764
  12,134
  13,571
  15,074
  16,640
  18,267
  19,955
  21,704
  23,515
  25,390
  27,331
  29,341
  31,423
  33,581
  35,819
  38,142
  40,555
  43,063
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
  991
  1,161
  1,316
  1,443
  1,533
  1,577
  1,574
  1,523
  1,431
  1,305
  1,155
  994
  830
  673
  529
  404
  299
  214
  149
  100
  65
  40
  24
  14
  8
  4
  2
  1
  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 52.9
Price to Sales 2.9
Price to Book 81
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow -50.2
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 -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 102.218 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 $12.9 billion.


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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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