Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, casino operator Wynn Resorts (NAS: WYNN) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Wynn's business and see what CAPS investors are saying about the stock right now.
Las Vegas (2002)
Casinos and gaming
Founder/Chairman/CEO Stephen Wynn
CFO Matt Maddox
Return on Capital (Average, Past 3 Years)
$1.78 billion / $3.16 billion
Las Vegas Sands (NYS: LVS)
Melco Crown Entertainment (NAS: MPEL)
MGM Resorts International (NYS: MGM)
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 30% of the 1,224 members who have rated Wynn believe the stock will underperform the S&P 500 going forward. These bears include Loerke and All-Star TSIF, who is ranked in the top 0.1% of our community.
A few months ago, Loerke tapped Wynn as an "ideal way to hedge the market if you are concerned about macroeconomic trends." Our CAPS member continues: "Macau growth is also dependent on the vicissitudes of dealing with a dictatorship (despite Steve Wynn's gratuitous flattery) that has lately been determined to crack down on rampant casino corruption in the region."
In fact, Wynn currently sports a price-to-book of 6.3. That's higher than that of other casino operators like Las Vegas Sands (4.5), MGM (0.8), and Melco (2.3).
CAPS All-Star TSIF elaborates in the Wynn bear case:
I'm finding it difficult to believe that Macau can still be growing at such an accelerated rate. The economy is starting to see pressures in that area as well and while I realize there is a growing middle/upper class, the growth to me appeared to be excessive. So far, Macau is holding Wynn's pants up. The negative here, however is that Macau has become an exceptionally large percent of earnings, so if the bubble does shrink the selldown in Wynn could be very pronounced.
During low market sentiment, I tend to pick on a few of the large caps that that have had good armor on the first downwave. ... Any with a 6X P/B are still vulnerable to any hiccups during a down sentiment swing.
What do you think about Wynn -- or any other stock, for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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