3 Reasons to Buy Wynn Resorts Stock

It seems as if nothing is going right for Wynn Resorts at the moment. Fourth-quarter revenue dropped 25.1% to $1.14 billion and net income fell 48.9% to $109.3 million on the back of declining VIP revenue in Macau.

These are unquestionably bad numbers, but beyond the headline figures Wynn Resorts has a few positives going forward. They might be hard to find, but here are the top three investors should be looking at.

Wynn Palace on Cotai in Macau might be the best reason to own Wynn Resorts stock. Image source: Wynn Resorts.

Wynn Palace is coming Wynn Resorts' operates two of the most profitable properties in Las Vegas and Macau, but the under-construction Wynn Palace should blow both out of the water. The $4 billion resort on Macau's Cotai Strip will have 1,700 hotel rooms, a performance lake, retail space, and 500 gaming tables, just to name a few amenities. Phase two of the development, called Wynn Diamond, promises more entertainment venues, including a 15,000-seat arena called Wynn Diamond Coliseum.

Anyone even considering owning Wynn Resorts today has to like the growth Wynn Palace and Diamond present, potentially doubling the company's revenue and earnings once fully open. The first phase will be completed sometime in the first half of 2016, so the challenge is waiting until the resort opens. This is a reason for long-term investors to buy and hold, but the ride might be bumpy in the meantime.

Las Vegas continues to be a strength for Wynn Resorts, generating over $500 million in EBITDA during 2014. Image source: Wynn Resorts.

Wynn is adjusting to the new mass marketOne primary focus of the company's fourth-quarter conference call was Wynn's transition from a focus on VIP players to the mass market.With its high-end amenities and world-class customer service, Wynn can attract the top end of players, but it had previously focused on the VIP, or junket, market that dwindled quickly in late 2014. Late in the year it transitioned to a focus on premium mass players,and the fruit of the mass market is only now starting to show up.

CEO Steve Wynn said mass market play was up 26%year over yearin January, compared to a 17.4% decline in Macau's overall gaming revenue across all casinos operating there.That is only one data point, but Wynn has successfully made transitions like this before. Premium mass market players would be great for Wynn because they're about four times more profitable than VIPs on a revenue basis, so profits could bounce back later in the year.

A dividend worth owning Growth opportunities and the potential in mass-market gaming are great for investors over the long term, but short-term investors shouldn't forget about Wynn Resorts' dividend.

Wynn pays a $1.50 per sharedividend per quarter, and even the latest weaker operations offered enough cash flow for that to continue. The current share count of 102 million establishes a total quarterly payout of about $153 million, well below the $352.5 million in EBITDA the company generated in the fourth quarter.

Wynn also has a strong balance sheet with $2.4 billion in cash and $7.3 billion in debt, including funds spent on Wynn Palace that aren't yet generating a return.

The short-term picture might not be bright for Wynn Resorts, but I think these are the best reasons to own the stock for those with a long-term horizon. It won't be a smooth ride, and the days of explosive growth in Macau are likely over, but this is a top operator in gaming and Steve Wynn has a long history of making the right moves for shareholders.

The article 3 Reasons to Buy Wynn Resorts Stock originally appeared on Fool.com.

Travis Hoium owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks 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 Motley Fool has a disclosure policy.