Las Vegas Sands Corp. (LVS - Free Report) had an impressive run on the bourses in 2017. The stock surged a whopping 30.1%, reflecting strong investor optimism through the year.
Further, the company delivered a ROE of 31.1% in the trailing 12 months compared with the industry’s 7.6%. This shows that it has a more efficient profit generation and reinvestment capacity compared to peers.
Given its strong brand recognition and improving non-gaming revenues, coupled with expansion in the domestic market, we believe that the stock has decent upside potential.
Let’s see what the New Year holds in store for Las Vegas Sands.
A Strong Portfolio and Solid Business Model Bode Well
We believe that Las Vegas Sands will continue to benefit from a solid business model, extensive high-quality assets and attractive property locations through 2018. Moreover, some entertainment offerings in the pipeline are expected to deliver increased profitability across the company’s properties.
Operating Environment in Macau to Improve
The company’s strong portfolio has helped it to withstand the economic downturn in China that hurt its Macao operations. Meanwhile, with the economic recovery in the United States, the company’s business should continue to improve in Macao. Operations in Macao are expected to deliver strong growth across both gaming and non-gaming businesses.
Las Vegas Sands industry-leading Cotai Strip property portfolio in Macao is witnessing strong visitation and higher hotel occupancy rates buoyed by the addition of The Parisian Macao. In fact, strong visitation at The Parisian Macao has now established it as a 'must-see' destination for visitors to the Cotai Strip. Going forward, the resort is anticipated to deliver continued growth as the company further aligns the property's suite of offerings to appeal to every segment of the continually growing and evolving Macao market.
Las Vegas Sands’ entire Cotai Strip portfolio of properties bode well. The company expects these properties to continue providing the economic benefits of diversification to Macao, help lure greater numbers of business and leisure travelers as well as provide both Macao and the company with a superior platform for growth in the future.
Going forward, the company plans to invest over $1.1 billion in new capital projects at Sands Cotai Central and the Four Seasons Hotel Macao over the next three years.
Non-Gaming Business Offers Huge Opportunities
Las Vegas Sands continues to diversify its revenue sources. The company’s consistent focus on a convention-based Integrated Resort business model is helping it to generate the most diversified set of cash flows and profit from non-gaming segments while bringing unsurpassed economic and diversification benefits to the regions in which it operates.
Moreover, new products along with The Parisian Macao will significantly bolster its strategic position and competitiveness across multiple segments. The company will be able to significantly grow its retail business and meetings, incentive, convention and exhibitions (MICE) space. Both these areas of business will aid non-gaming revenues.
Las Vegas Sands Corp. Revenue (TTM)
Upward Estimate Revisions for 2018
Analysts have increased their 2018 estimates for the company, making the earnings picture favorable. Over the past 60 days, four estimates have gone up compared with no downward revisions for the year. This trend has caused the Zacks Consensus Estimate to rise from $2.97 a share 60 days ago to its current level of $3.05 for the year.
Zacks Rank and Growth Score
The company carries a Zacks Rank #2 (Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities for investors. Thus, the company appears to be a convincing investment proposition at the moment.
Other Key Picks
Other top-ranked stocks in the Zacks Consumer Discretionary sectorare Melco Resorts & Entertainment (MLCO - Free Report) , Boyd Gaming Corp. (BYD - Free Report) and Hilton Worldwide Holdings (HLT - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Melco Resorts, Boyd Gaming and Hilton are expected to witness a respective 19.8%, 31.7% and 27.7% increase in 2018 earnings.
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