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Is Las Vegas Sands (LVS) Poised for a Beat in Q4 Earnings?

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Las Vegas Sands Corp. (LVS - Free Report) is slated to release fourth-quarter 2017 numbers on Jan 24, after market close.

In the last quarter, the company delivered a positive earnings surprise of 14.93%. In fact, Las Vegas Sands’ earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 9.11%.

Shares of the company have rallied 18.8% in the past six months, outperforming the industry’s gain of 13.4%.

Given the ongoing recovery in gaming revenues in Macao and continued improvement in the Las Vegas business, the company is expected to perform well in the quarter to be reported.

Top Line Likely to Improve

Las Vegas Sands’ revenues are likely to increase year over year on a solid business model, extensive non-gaming revenue opportunities, high quality assets and attractive property locations. Additionally, a few planned entertainment offerings are expected to prove profitable in the fourth quarter.

Consequently, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $3.21 billion, reflecting 4.2% year-over-year growth. Also, net revenues in the first nine months of 2017 increased 13.3% from the year-ago level, indicating an upward trend in overall revenues.

Coming to the company’s Macao business, the consensus estimate for fourth-quarter revenues in Venetian Macao reflects 1.4% year-over-year growth. Sands Cotai Central revenues are expected to grow 6.5% in the fourth quarter from a year ago. Further, Sands Macao revenues are expected to witness 0.6% year-over-year growth in the fourth quarter of 2017. Although revenues in The Plaza Macao and Four Seasons Hotel Macao are expected to decline 9.2% from the fourth quarter of 2016, the consensus estimate projects sequential growth in the quarter to be reported.

Continual investments in Macao are expected to result in the sequential improvement. The company aims to benefit from the possible structural growth in Macao. In fact, the third quarter of 2017 marked the strongest results in Macao with robust growth metrics across the gaming and non-gaming segments. This trend is expected to reflect in the fourth-quarter results as well.

In terms of Las Vegas operations, the consensus estimate for fourth-quarter revenues is pegged at $396 million, reflecting 4.8% sequential growth. Moreover, in the first nine months of 2017, revenues from Las Vegas operations increased 6.3% from a year ago.

As it is, the company is focusing on renovation and promotion of its Las Vegas properties in order to drive segmental performance. The rise in employment rate and tourism in the region has been boosting demand at the company’s properties. Further, diversification of the company’s resort portfolio and non-gaming options should contribute significantly to revenues.

Improvement in EBITDA Margins to Drive Earnings

While some companies in the leisure industry are grappling with margin pressure, Las Vegas Sands’ performance has been considerably better. EBITDA margins have been improving consistently buoyed by focus on mass and non-gaming segments that carry higher margins. This in turn is helping earnings per share growth.

The consensus estimate for fourth-quarter earnings is pegged at 77 cents per share, reflecting 24.2% year-over-year growth.

Our Quantitative Model Suggests a Beat

According to our quantitative model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has a fair chance of beating estimates. Meanwhile, stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided.

Las Vegas Sands has a Zacks Rank #2 and an Earnings ESP of +3.45%, a combination that increases the odds of a beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Las Vegas Sands Corp. Price and EPS Surprise



Other Stocks to Consider

A few other top-ranked stocks in the same space include Wynn Resorts, Limited (WYNN - Free Report) , Penn National Gaming, Inc. (PENN - Free Report) and Melco Resorts & Entertainment Limited (MLCO - Free Report) . While Wynn Resorts and Penn National sport a Zacks Rank #1 (Strong Buy), Melco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Wynn Resorts and Melco’s 2018 earnings estimates signal growth of 26.5% and 19.8%, respectively. Penn National’s current-quarter earnings are expected to increase 260%.

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