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5 Reasons Why You Should Invest in Las Vegas Sands (LVS) Now
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Shares of Las Vegas Sands Corp. (LVS - Free Report) have rallied 31% year to date, outperforming the S&P 500’s gain of 20.2%.
Moreover, upward revision in earnings estimates for the current and next year reflects analysts’ unwavering confidence in the company. Over the past two months, current and next year earnings estimates inched up 1.1% and 2%, respectively. The company also delivered positive earnings surprises in three of the trailing four quarters, the average beat being 9.11%.
Per our VGM Score, which identifies the most attractive value, growth and momentum characteristics, Las Vegas Sands has a Growth Score of B reflecting the stock’s decent growth potential. Also, the company’s momentum Score of A indicates that it is the right time to invest in the stock. Let us delve deeper into the other factors that make this stock a lucrative pick.
Diversification and Operating Environment Bode Well
Las Vegas Sands generates a major chunk of its revenues from Macao. In order to cash in on the Macao market prospects, the company is consistently trying to diversify its revenue sources. The company is focused on a convention-based Integrated Resort business model that is helping it generate diversified cash flows and profit from non-gaming segments. The business framework is also bringing unsurpassed economic and diversification benefits to the regions in which the company operates. In fact, non-gaming revenues have been relatively better over the past few quarters.
We note that the Zacks Consensus Estimate for current-year revenues is pegged at $12.7 billion, reflecting a year-over-year improvement of 11.1%.
Las Vegas Sands has invested more than $13 billion in Macao since 2002 and plans to spend another $1.1 billion on new capital projects at Sands Cotai Central and the Four Seasons Hotel Macao over the next three years. Meanwhile, the operating environment has improved substantially in third-quarter 2017 and is expected to improve further.
Mass and Non-Gaming Segments to Drive Margins
While some companies in the leisure industry are facing margin pressure, Las Vegas Sands’ EBITDA margins have been improving consistently owing to focus on mass and non-gaming segments that carry higher margins. These segments are expected to continue delivering margin growth and boost earnings. Notably, the company has delivered margins of more than 30% since the beginning of 2012.
Arguably, earnings growth is of utmost importance for determining a stock’s potential as surging profit levels are often indicative of solid prospects and stock price gains. The consensus estimate for current-year earnings is pegged at $2.88, reflecting year-over-year growth of 23.5%.
Efficient Use of Shareholders Funds
Las Vegas Sands delivered a ROE of nearly 31.1% in the trailing 12 months, compared with the industry’s gain of 7.1%. This shows that the company has a more efficient profit generation and reinvestment capacity compared to peers.
Poised to Advantage From Global Potential
Being a distinguished developer, owner and operator of casino resorts, part of Las Vegas Sands’ revenues is influenced by the global games market. Per a recent press release, the Global Online Gambling Market has huge potential. The market was valued at $44.16 billion in 2016 and is estimated to reach $81.71 billion by 2022, at a CAGR of 10.8%. Moreover, according to the Global Games Market Report by Newzoo, the overall growth rate of the gaming industry is improving.
Additionally, Las Vegas Sands’ revenues are likely to grow on optimism surrounding improving tourism in Las Vegas.
Expansion Efforts in Las Vegas
The Las Vegas Strip has been recording high occupancy rates over the past year. The improvement in employment rate and the rise in tourism numbers in the region have been boosting demand at the company’s properties in the region. Subsequently, Las Vegas Sands is focusing on renovation and promotion of its Las Vegas properties in order to drive segmental performance. Also, the company’s diversified resort portfolio and non-gaming services are likely to contribute substantially to revenues.
Moreover, Las Vegas Sands, in collaboration with The Madison Square Garden, Live Nation Entertainment and Oak View Group, plans to create a large-scale music and entertainment venue in Las Vegas. Meanwhile, Sands Bethlehem’s plan of a $90-million casino expansion is likely to add a new gaming floor. This will include 1,000 new gaming seats in addition to the restaurant space, public restrooms and extra back of house facilities. The casino expansion is expected to further drive the company’s top line.
Zacks Rank and Other Stocks to Consider
Las Vegas Sands carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the industry are Churchill Downs Incorporated (CHDN - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and The Stars Group Inc. . While Churchill Downs sports a Zacks Rank #1 (Strong Buy), Wynn Resorts and Stars Group have a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current-year earnings for Churchill Downs are expected to increase 26.4%.
Stars Group’s current-year earnings are estimated to rise 20.7%.
Wynn Resorts’ current-year earnings are expected to grow 58%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
5 Reasons Why You Should Invest in Las Vegas Sands (LVS) Now
Shares of Las Vegas Sands Corp. (LVS - Free Report) have rallied 31% year to date, outperforming the S&P 500’s gain of 20.2%.
Moreover, upward revision in earnings estimates for the current and next year reflects analysts’ unwavering confidence in the company. Over the past two months, current and next year earnings estimates inched up 1.1% and 2%, respectively. The company also delivered positive earnings surprises in three of the trailing four quarters, the average beat being 9.11%.
Per our VGM Score, which identifies the most attractive value, growth and momentum characteristics, Las Vegas Sands has a Growth Score of B reflecting the stock’s decent growth potential. Also, the company’s momentum Score of A indicates that it is the right time to invest in the stock. Let us delve deeper into the other factors that make this stock a lucrative pick.
Diversification and Operating Environment Bode Well
Las Vegas Sands generates a major chunk of its revenues from Macao. In order to cash in on the Macao market prospects, the company is consistently trying to diversify its revenue sources. The company is focused on a convention-based Integrated Resort business model that is helping it generate diversified cash flows and profit from non-gaming segments. The business framework is also bringing unsurpassed economic and diversification benefits to the regions in which the company operates. In fact, non-gaming revenues have been relatively better over the past few quarters.
We note that the Zacks Consensus Estimate for current-year revenues is pegged at $12.7 billion, reflecting a year-over-year improvement of 11.1%.
Las Vegas Sands has invested more than $13 billion in Macao since 2002 and plans to spend another $1.1 billion on new capital projects at Sands Cotai Central and the Four Seasons Hotel Macao over the next three years. Meanwhile, the operating environment has improved substantially in third-quarter 2017 and is expected to improve further.
Mass and Non-Gaming Segments to Drive Margins
While some companies in the leisure industry are facing margin pressure, Las Vegas Sands’ EBITDA margins have been improving consistently owing to focus on mass and non-gaming segments that carry higher margins. These segments are expected to continue delivering margin growth and boost earnings. Notably, the company has delivered margins of more than 30% since the beginning of 2012.
Arguably, earnings growth is of utmost importance for determining a stock’s potential as surging profit levels are often indicative of solid prospects and stock price gains. The consensus estimate for current-year earnings is pegged at $2.88, reflecting year-over-year growth of 23.5%.
Efficient Use of Shareholders Funds
Las Vegas Sands delivered a ROE of nearly 31.1% in the trailing 12 months, compared with the industry’s gain of 7.1%. This shows that the company has a more efficient profit generation and reinvestment capacity compared to peers.
Poised to Advantage From Global Potential
Being a distinguished developer, owner and operator of casino resorts, part of Las Vegas Sands’ revenues is influenced by the global games market. Per a recent press release, the Global Online Gambling Market has huge potential. The market was valued at $44.16 billion in 2016 and is estimated to reach $81.71 billion by 2022, at a CAGR of 10.8%. Moreover, according to the Global Games Market Report by Newzoo, the overall growth rate of the gaming industry is improving.
Additionally, Las Vegas Sands’ revenues are likely to grow on optimism surrounding improving tourism in Las Vegas.
Expansion Efforts in Las Vegas
The Las Vegas Strip has been recording high occupancy rates over the past year. The improvement in employment rate and the rise in tourism numbers in the region have been boosting demand at the company’s properties in the region. Subsequently, Las Vegas Sands is focusing on renovation and promotion of its Las Vegas properties in order to drive segmental performance. Also, the company’s diversified resort portfolio and non-gaming services are likely to contribute substantially to revenues.
Moreover, Las Vegas Sands, in collaboration with The Madison Square Garden, Live Nation Entertainment and Oak View Group, plans to create a large-scale music and entertainment venue in Las Vegas. Meanwhile, Sands Bethlehem’s plan of a $90-million casino expansion is likely to add a new gaming floor. This will include 1,000 new gaming seats in addition to the restaurant space, public restrooms and extra back of house facilities. The casino expansion is expected to further drive the company’s top line.
Zacks Rank and Other Stocks to Consider
Las Vegas Sands carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the industry are Churchill Downs Incorporated (CHDN - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and The Stars Group Inc. . While Churchill Downs sports a Zacks Rank #1 (Strong Buy), Wynn Resorts and Stars Group have a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current-year earnings for Churchill Downs are expected to increase 26.4%.
Stars Group’s current-year earnings are estimated to rise 20.7%.
Wynn Resorts’ current-year earnings are expected to grow 58%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>