EAT Brinker International Inc

CHICAGO, Feb. 14, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Wynn Resorts Ltd. (Nasdaq: WYNN), Las Vegas Sands Corp. (NYSE: LVS), Chipotle Mexican Grill, Inc. (NYSE: CMG), Brinker International Inc. (NYSE: EAT) and Alcatel-Lucent (NYSE: ALU).

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Here are highlights from Friday's Analyst Blog:

Wynn Soars on Macau Growth

Wynn Resorts Ltd. (Nasdaq: WYNN) reported its fourth-quarter 2010 adjusted earnings of 91 cents per share, handily beating the Zacks Consensus Estimate of 63 cents and well above the year-earlier earnings of 8 cents. On a GAAP basis, net income was $114.2 million or 91 cents per share versus net loss of $5.2 million or 4 cents recorded in the comparable quarter prior year.

The results were boosted by higher-than-expected revenues. Net revenue surged 52.9% year over year to $1,237.2 million outpacing the Zacks Consensus Estimate of $1,114.0 million. The outperformance was primarily attributable to its booming Macau operations.

For full fiscal 2010, adjusted net income attributable to Wynn Resorts was $261.0 million, or $2.11 per diluted share versus 31.7 million, or 26 cents per diluted share recorded in the prior-year quarter. Total revenue increased 37.4% over the year to $4.2 billion.

Macau Operations

Net revenue at Wynn Macau was $912.1 million, up 79.4% year over year, primarily driven by a significant increase in table games turnover in the VIP segment, which rose by a massive 63.7% from the prior-year period to $27.7 billion.

The VIP table games win in the quarter was 3.15% based on turnover, ahead of the expected range of 2.7% to 3.0% and significantly higher than 2.70% recorded in the prior-year quarter.

However, table games in the mass market category expanded 29.5% year over year to $663.3 million. Mass market table games win rate was 26.0%, well above the expected range of 19% to 21% and 22.9% recorded in the year-earlier quarter.

Average daily rate (ADR) at Wynn Macau was $303, up from $271 in the year-ago quarter. Occupancy level rose to 92.3% from 90.6% in the prior-year quarter.

Non-gaming revenues at Wynn Macau shot up 58.6% to $92.6 million from the prior-year quarter, primarily aided by the increase in hotel and retail revenues. These revenues soared 92.7% and 41.8%, respectively, driven by the addition of Encore rooms and the opening of three new boutiques at Encore. Retail revenues benefited from strong same-store sales growth.

Including Encore, Wynn Resorts currently has 479 tables (243 VIP tables, 225 mass market tables and 11 poker tables) and 1,015 slot machines at Wynn Macau.

Las Vegas Operations

Wynn Resorts' revenue from Las Vegas operations increased 8.0% year over year to $325.1 million. Net casino revenue was $139.2 million, up 16.0% from the prior-year period. Gross non-casino revenues upped 2.6% year over year to $230.9 million, primarily on increased revenues from nightclub operations and the newly opened Surrender.

Reflecting continued challenging conditions in Las Vegas, Wynn reported a drop in room revenues, which were down 1.7% year over year at $76.4 million despite the rise in ADR and occupancy.

The decrease in revenue was credited to the 9.0% fewer room nights available for sale during the quarter due to the remodeling of the rooms at Wynn Las Vegas. This room remodeling is expected to be completed in the second quarter of 2011. ADR at Las Vegas registered a 7.1% increase to reach $235, while occupancy level grew modestly to 81.8% from the year-ago level of 81.0%.

Our Take

We remain optimistic on the company based on its improving fundamental growth prospects. Wynn Macau's contribution to the company's earnings has increased significantly in the last few years. Wynn Resorts' close competitors Las Vegas Sands Corp. (NYSE: LVS) also recently reported its fourth-quarter earnings. Las Vegas's fourth-quarter 2010 earnings of 42 cents per share were ahead of the Zacks Consensus Estimate of 38 cents.

Both companies' results reflect strong performance at Macau business. Macau, the only Chinese city where gambling is legal, has survived the economic downturn relatively well. Gaming-friendly policies of the local government have facilitated the industry to achieve record earnings in the city.

We expect Asian operations to significantly support the earnings of gaming companies in the coming quarters. Additionally, with global economy showing a gradual recovery, Las Vegas businesses are also rebounding slowly.

Wynn Resorts currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are also maintaining our long-term Outperform recommendation on the stock.

Chipotle Tops with Strong Sales

Chipotle Mexican Grill, Inc. (NYSE: CMG) posted robust fourth quarter and fiscal 2010 results that topped the Zacks Consensus expectation on the heels of strong top-line growth buoyed by higher traffic count and new restaurant openings.

The quarterly earnings of $1.47 per share outpaced the Zacks Consensus Estimate of $1.29, and soared 48.5% from 99 cents in the prior-year quarter.

Chipotle said that revenues for the quarter rose 24.5% to $482.5 million driven by new restaurant openings and increase in comparable-store sales. The reported revenues also outperformed the Zacks Consensus Estimate of $468 million.

The company's full-year earnings per share were $5.64 versus $3.95 in full fiscal 2009. Revenues were $1.84 billion in full fiscal 2010, representing a year-over-year growth of 20.9%.

Quarter Highlights

Comparable-store sales growth has been decelerating since second-quarter 2008 – when it increased 7.1% – although it remained positive, showing resilience in a sluggish environment.

After reaching the lowest point of 1.7% in the second-quarter 2009, comps have been on the rise. Comparable-stores sales climbed 12.6% in the quarter under review, reflecting a sequential increase of 120 basis points and surged from 2% in the prior-year quarter.

Restaurant operating margin expanded 140 basis points to 25.9%, reflecting a 90- basis point (bps) (as a percentage of total revenue) decline in labor, a 80-bp fall in occupancy, a 70-bp drop in other operating costs, partially offset by a 90-bp rise in food, beverage and packaging costs. The margin also benefited from comparable restaurant sales growth.

Total operating margin increased from 13.0% in the fourth quarter of 2009 to 15.3% in the current quarter, driven by a 50-bp dip in general and administrative expense, a 40-bp plunge in depreciation and amortization cost and a 10-bp decline in pre-opening cost.

Fiscal Year Highlights

Same-restaurant sales jumped 9.4% from the prior year period, driven by higher traffic. 

Restaurant operating margin expanded 180 basis points to 26.7%, reflecting a 10- bps (as a percentage of total revenue) drop in food, beverage and packaging costs, a 70-bp decline in labor, a 50-bp fall in occupancy and a 40-bp decrease in other operating costs.

Total operating margin enhanced 160 bps to 15.7%, driven by a 20-bp plunge in both depreciation and amortization cost and pre-opening cost.

Outlook

For fiscal year 2011, management now expects low single digit comparable-store sales growth. 

Our Take

We believe Chipotle is well positioned to expand rapidly while generating improved earnings margins and returns on invested capital. With a strong balance sheet, consistent earnings, healthy cash flow, excellent unit economics, international expansion and continued marketing initiatives, we are of the opinion that the stock provides relative safety and consistent growth. The company reported better than expected results, hence we expect estimates to move up in the coming days.

One of Chipotle's primary competitors, Brinker International Inc. (NYSE: EAT) reported second quarter 2011 adjusted earnings per share (EPS) of 38 cents, surpassing the Zacks Consensus Estimate of 32 cents. It was also well ahead of 25 cents reported in the prior-year quarter. The upside in earnings was driven by continued margin expansion at Chili's and top-line growth at Maggiano's.

Alcatel's 4Q EPS Better Than Ests

Alcatel-Lucent (NYSE: ALU) reported its fourth quarter and full-year 2010 earnings result. Fourth-quarter earnings per share were euro 0.13 (17 cents) compared with prior-year earnings per share of euro 0.02 (3 cents). The company outperformed the Zacks Consensus Estimate of 14 cents.

For full-year 2010, the company posted a loss per share of euro 0.15 (20 cents) compared with loss per share of euro 0.23 (32 cents). Loss per share for the year was below the Zacks Consensus Estimate of loss per share of 19 cents.

Total Revenue

Total revenue in the quarter was euro 4,862 million ($6,608.9 million) compared with euro 3,967 million ($5,863.8) in the prior-year quarter. On a constant currency basis, revenue surged 15.1% year over year in the quarter.

For full-year 2010, total revenue was euro 15,996 million ($21,225.1 million) compared with euro 15,157 million ($21,116.4 million) in 2009.

Segment Revenue

Networks revenue in the quarter increased 31.7% year over year (23.1% on a constant currency basis) to euro 2,952 million. Within the segment, IP division revenue was up 58.8%, Optics division revenue surged 6.8% and Wireless division revenue climbed 44.5%. Wireline division posted a positive growth of 22.6% after experiencing a decline of 13% in revenue. Sales of next generation products were up 72%.

Applications revenue was euro 575 million, up 7.5% year over year. Within the segment, Network Applications revenue accelerated 8.2% and Enterprise Application revenue was up 4.1%.

Services revenue was euro 1,140 million, up 10.7% year over year

Income & Expenses

Gross margin in the quarter was 36.2%, down 50 basis points year over year, primarily due to the competition in the market, partially offset by increased volume, change in geographical and product mix and a reduction in fixed operation costs. However, gross margin was up 240 basis points sequentially.

Operating expenses in the quarter increased 9% year over year on a constant currency basis, primarily due to higher R&D expenditures related to new product developments. Operating profit was euro 394 million (8.1% of revenues).

Balance Sheet

Cash and cash equivalents and marketable securities were $5,689 million at the end of 2010 compared with $5,570 million at the end of 2009. Long-term debt was $4,112 million while total equity amounted to $4,205 million.

Operating Cash flow in the quarter was $702 million compared with $193 million in the prior quarter and $635 million in the prior-year quarter.

Outlook

The company is confident of delivering a change in its financial results driven by its revamped product portfolio, implementation of High Leverage Network and Application Enablement strategy, increased customer significance and improved operational excellence. These were highlighted by the solid revenue growth and strong margin performance in the fourth quarter.

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