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Bull of the Day: Las Vegas Sands (LVS)

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Las Vegas Sands (LVS - Free Report) , a Zacks Rank #2 (BUY) is a hotel, gaming, and retail mall company headquartered in Las Vegas, Nevada. The company owns The Venetian Resort Hotel Casino, the Sands Expo and Convention Center, Venetian Interactive, an internet based venture, and Venetian Macao Limited, a developer of multiple casino hotel resort properties in The People's Republic of China's Special Administrative Region of Macao.

Recent Earnings Results

In the company’s most recent earnings report it beat both the top and bottom line expectations for the third consecutive quarter.  Also, over the last four quarters the company has posted an average positive surprise of +9.1%. On a year over year basis, the company posted gains in the following; consolidated net revenues +7.7%, net income +13%, GAAP diluted EPS +10.8%, and consolidated adjusted property EBITDA +6.0%.

Drivers Going Forward

Management has been focused on several key drivers for the company which include, a three year $1.1 billion capital plan, strengthening its VIP business, and property remodeling.  The capital plan will rebrand and renovate its resort in Macau from the Sands Cotai Central to The Londoner Macao. This plan also includes the renovation and the addition of hundreds of new suites at the St. Regis and Four Seasons Macau.  The goal is to increase the company’s share of high spending Chinese tourists at Asia’s leading leisure tourism and business destination.  

Management has also improved its position in the VIP area as volumes and margins continue to rise across the world, with better than expected traction in both Macau and Singapore.  The remodeling plan has already begun to attract more customers who are flocking to the luxury accommodations, and expanded retail shopping within its malls.   The addition of the new suites and retail offerings has already positively impacted the top line as both occupancy rates, and retail mall revenues have increased.  

On the income side, last quarter management increased its quarterly dividend payment by 3% for an annual dividend yield of 4.16%.  Further, LVS has a share repurchase program that has consistently purchased about $75 million of common stock each quarter as part of its $2 billion program started in 2013.

Management’s Take

According to Sheldon Adelson, Chairman and CEO, “We are pleased to have delivered strong financial results again this quarter, led by growth in both Macao and Singapore. Our convention-based Integrated Resort business model remains the key driver of our financial results, with consolidated adjusted property EBITDA reaching $1.21 billion, while hold-normalized adjusted property EBITDA increased 10.4%. We also continued to return excess capital to shareholders through dividends and share repurchases during the quarter.”

Price and Earnings Consensus Graph

As you can see in the graph below, management’s capital plan, cost cutting measures, and its continued strength in the VIP segment has caused the stock price and future earnings estimates to rise.

Las Vegas Sands Corp. Price and Consensus

Las Vegas Sands Corp. Price and Consensus | Las Vegas Sands Corp. Quote

Increasing Earnings Estimates

Over the past 90 days, earnings estimates for Q4 17, Q1 18, FY 17 and FY 18 have all seen positive estimate revisions; Q4 17 rose from $0.68 to $0.75, Q1 18 improved from $0.70 to $0.74, FY 17 increased from $2.72 to $2.88, and FY 18 was lifted from $2.78 to $2.99.

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