Joseph Dixon
Wynn Resorts’ (NASDAQ: WYNN) credit rating remains in junk territory, but the casino operator was praised for its solid liquidity position and an improving outlook in Macau. In a new report, Fitch Ratings reiterated a grade of “BB-“ with a “stable” outlook on the gaming company, noting that view is supported by expectations that Macau will continue rebounding this year, Wynn’s impressive market positioning in Las Vegas, and its robust liquidity profile.
Macau Market Growth and Challenges
“Wynn’s two Macau properties continue to grow following the removal of travel restrictions in early 2023, albeit slightly below Fitch’s expectations,” notes the ratings agency. “The Macau gaming market grew 24% in 2024 but remains 22.5% below pre-pandemic levels. This was due primarily to the crackdown on VIP gamblers to stem capital outflow, and to a lesser extent, to weaker economic conditions in China.”
The demise of the Macau junket industry crimped concessionaires, such as Wynn Macau, that have significant exposure to VIP clients, but analysts believe that those operators could prove more resilient than their mass market-dependent rivals if China’s economy remains sluggish and if the country doesn’t unveil broader monetary stimulus measures.
Wynn’s Financial Position and Future Outlook
Fitch points out that Wynn doesn’t have a specific policy on leverage ratios, but the research firm estimates the operator posted an earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR)/debt ratio of 5.6x last year, down from 6.7x the prior year. The ratings agency added the gaming company has “prudently” managed its balance sheet in recent years despite the demands of enhancing existing venues.
Fitch also said that while Wynn boosted the size of its share repurchase program last year, buybacks are likely to be “opportunistic” going forward. “We forecast positive free cash flow (FCF) over 2025-2028. Liquidity is robust, which includes $2.4 billion in cash, $735 million of availability in the Wynn Resorts Finance revolver, and $354 million under the WML revolver. Fitch forecasts FCF margins at 10%-11%, which should enable Wynn to meet debt obligations and potential capital needs for development projects,” according to the ratings agency.
Maintaining a solid cash position and potentially driving leverage ratios below 5x could be catalysts for a ratings upgrade, said Fitch.
Potential Upside from US and UAE Markets
Equity investors typically view Wynn through a Macau lens, but the company’s Las Vegas casino hotels as well as the possibility of procuring a New York City-area gaming license could be upside catalysts. The same is true of Wynn Al Marjan Island in the United Arab Emirates (UAE) — an opportunity set analysts argue isn’t priced into the shares.
In Las Vegas, Fitch sees Wynn’s integrated resorts delivering “superior” results relative to rival properties due to the operator’s focus on high-value customers that typically generate higher earnings per room. In the UAE, where Wynn is building the region’s first regulated casino hotel, “Fitch views the project as attractive due to limited competition, favorable demographics, and appeal to high-value customers, though risks include higher construction costs, delays, and slower visitation growth.”
