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Unsurprisingly, Wynn Resorts Q2 Profit Falls

On the back of a persistent slump in one of its main markets, Wynn Resorts' (NASDAQ: WYNN) second quarter results are down significantly on a year-over-year basis.

For the quarter, net revenue declined by 26% to $1.04 billion. Net profit fell much more steeply, by 72% to $56.5 million ($0.56 per diluted share). On a non-GAAP basis, the bottom line declined by 65% to $75.0 million ($0.74 per diluted share). Both the revenue and net profit figures fell short of analyst projections. On average, estimates were for the company to post a top line of $1.07 billion and a non-GAAP bottom line of $0.96 per share.

The declines were primarily due to a slowdown in Wynn's largest market, the Chinese gambling enclave of Macau. Net revenues there were 36% lower, at $617 million. Last year, the Chinese government began an anti-corruption crackdown aimed chiefly at the VIP segment of the market. This has not relented, and it has seriously affected overall gambling take in the enclave. In the first six months of this year, total revenue in the region fell by 37% on a year-over-year basis, according to Macau's Gaming Inspection and Coordination Bureau.

Wynn also experienced a decline in its other big market, Las Vegas, although this was not as pronounced. The company took in net revenues of $423.5 million there, 6% less than in the second quarter of 2014. As with Macau, although to a far lesser degree, Las Vegas casinos in general are grappling with a recent overall downturn in gambling revenue.

These are not the best of times for Wynn. Its shares have lost more than half their value in the past year, and in April, the company slashed its dividend by 67%.

However, Wynn still has a set of very attractive resorts located on prime real estate in both Las Vegas and Macau, with a new property (Wynn Palace) set to open next year in the latter. Meanwhile, the Chinese government recently relaxed visa restrictions on mainland visitors traveling to Macau, a move that should help those revenue numbers improve.

Considering all of the above, now might just be a good time for investors to open a position in Wynn Resorts for a "buy it while it's down" play.

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Eric Volkman has no position in any stocks mentioned.

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