many casino stocks have rebounded this year as a play on the postcovid reopening the stock which traded a little above 200 in 2018 was recently at 101 and change down about 12 this year alone as of aug 26 in contrast mgm resorts international mgm and caesars entertainment czr both of which offer more direct exposure to the las vegas strip and to us regional markets have gained 33 and 34 in 2021 respectively the big concern for wynn is that its fortunes depend heavily on macau which has been under tight travel restrictions due to the pandemic in 2019 for example about threequarters of the company’s 18 billion of adjusted property earnings before interest taxes depreciation and amortization or ebitda came from that market in china wynn also has smaller operations in las vegas where it is based and boston but macau is a key driver of investor sentiment one contrarian on wynn is stephanie link chief investment strategist at hightower a financial advisory firm she runs the largecap portion of a portfolio used by the firm’s advisors link believes the wynn’s various challenges are cyclical not secular “i’m always trying to find things that people hate” says link “that’s the way you make money you buy low and you sell high” the stock she adds “has been painful to own because it’s taking longer than i had expected” to recover but she’s hanging in there encouraged by the company’s secondquarter results released early this month she also cites the company’s digital gaming and sports betting enterprise in which it owns a majority stake as a plus for the company’s prospects as for its bricksandmortar assets wynn is known for its prowess in luxury properties including those on the las vegas strip that includes wynn las vegas and encore at wynn las vegas “whenever i can i can get the no 1 company truly on sale that is worth waiting for and having patience” link says by link’s calculations wynn trades at 104 times enterprise value essentially net debt plus market capitalization to 2022 estimated ebitda it’s not super cheap but reasonable for a company that’s been showing signs of improvement in her view wynn has had a streak of consecutive quarterly earnings losses during the pandemic most recently at an adjusted 112 a share in the second quarter but that was better than the first quarter’ loss of 241 a share and the second quarter of 2020’s loss of 614 a share at the same time operating revenue while still not close to prepandemic levels has been improving it was nearly 1 billion in the second quarter up from 726 million in the previous threemonth period “you are getting incremental lessbad” financial results says link “you make money on less bad” ebitda which financial analysts pay close attention to has been rebounding as well in macau adjusted property ebitda totaled 676 million in the second quarter compared with a loss of 1936 million a year earlier during the company’s secondquarter earnings call with analysts on aug 4 wynn cfo scott billings ascribed the better macau result in part to “solid cost controls” the company has targeted 150 million of annual ongoing cost savings “they are cutting costs dramatically as they should because they have to” says link “but they are doing it methodically and it’s helping results” meanwhile las vegas has been showing marked improvement helped by strong leisure traffic las vegas adjusted property ebitda came in at 1332 million a big swing from minus 756 million in 2020’s second quarter the delta variant has been a concern as the summer has gone on but las vegas hotel occupancy numbers in july were pretty solid according to the las vegas convention and visitors authority total occupancy was 794 up from 759 in june weekend occupancy however dropped to 881 from 894 in june perhaps the greatest uncertainty for the stock–and for other casino operators as well—is the chinese government wynn’s concession agreement with the macau government is up for renewal next year the current agreement ends next june link however takes comfort that a wynn competitor las vegas sands lvs is making a similar bet on macau—in that case by agreeing earlier this year to sell the venetian an iconic strip property and its other las vegas real estate to vici properties vici for 625 billion “las vegas sands is doubling down on macau” says link “if they didn’t think it was a huge—and the biggest—market to go after they wouldn’t do such a thing” as for wynn’s stock she says the market is “discounting so much bad that i think the riskreward is really attractive” she thinks the stock is worth at least 140 some 40 above its recent price write to lawrence c strauss at lawrencestraussbarronscom