Is More Good News Ahead After Wynn Resorts, Limited Jumped 17% in January?

By Travis Hoium Markets Fool.com

The flower ferris wheel in Wynn Palace. Image source: Wynn Resorts.

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What happened

Shares of gaming giant Wynn Resorts, Limited (NASDAQ: WYNN) jumped 17.2% in January, according to data provided by S&P Global Market Intelligence, as Macau's gaming market continued to recover and earnings showed some improvement.

So what

December's gaming revenue figures from Macau showed an 8% increase in play, which will broadly helped all gaming companies. But data from the region for the fourth quarter showed a 25% increase in VIP play compared to a 6% increase in mass market play. That will disproportionately help Wynn, who is much more focused on VIPs than its competitors.

Wynn also released fourth-quarter earnings that showed a 37.3% increase in revenue to $1.30 billion and a 30.5% jump in net income to $113.8 million. This is the first full quarter Wynn Palace in Macau was included in results, and as the resorts' operations progress, it will likely contribute more to the bottom line.

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Now what

If Macau's gaming market continues to improve, particularly on the VIP side, Wynn Resorts should have lots of potential for growth. Increased cash flow could also help the company fund its Wynn Boston Harbor and Wynn Paradise Park projects as well.

Wynn still has risk ahead given its $10.1 billion cash load, but with operations improving, I think upside potential outweighs the risk. And after a great start to 2017, this could be another great year for Wynn Resorts investors following a strong 2016.

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