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Las Vegas Sands (LVS) Q3 Earnings to Gain From Strong Margins

Zacks Equity Research
Updated

Las Vegas Sands Corp. LVS is slated to release third-quarter 2018 financial numbers on Oct 24, after the market closes.

A strong portfolio of gaming and lodging services, extensive non-gaming revenue opportunities, high-quality assets and attractive property locations have been the company’s key revenue growth drivers. Further, strong Macao business is likely to have aided revenues in the to-be-reported quarter.

Moreover, the company’s strong margins are also likely to have boosted earnings in the third quarter of 2018.

Notably, in a year’s time, shares of Las Vegas Sands have lost 11.9%, compared with the industry’s collective decline of 18.1%.


Let’s delve deeper into the factors that are likely to have shaped the company’s third quarter.

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Revenues to Remain Strong

Las Vegas Sands witnessed revenue growth across its major Macao operations in the second quarter of 2018. We believe that the upside trend is likely to have continued in the third quarter as well. The Zacks Consensus Estimate predicts Macau Plaza revenues to grow 26.5% and Sands Cotai revenues are projected to increase 9.5% year over year. Further, for domestic operations, revenues are likely to increase 29.7% from the year-ago quarter.

The company’s industry-leading Cotai Strip property portfolio in Macao is witnessing strong visitation and higher hotel occupancy rates. Markedly, Las Vegas Sands has invested over $13 billion in Macao since 2002, thereby consistently contributing to Macao's diversification and appeal as a business and leisure tourism destination.

The company sees remarkable future opportunity in the Macao market, and consequently 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. With these investments, Las Vegas Sands aims to benefit from likely structural growth in Macao in coming years and stay ahead of competition, in terms of the quality and scale of its product, and amenities.

For the third quarter, the consensus estimate pegs revenues at $3.4 billion, suggesting a 6.7% increase from the year-ago quarter.

Earnings to Gain From High Margins

Las Vegas Sands’ EBITDA margins have been improving consistently, owing to focus on mass and non-gaming segments that carry higher margins. Moreover, it expects to continue delivering growth in the non-gaming segment. The company has delivered margins of more than 30% since the beginning of 2012. In second-quarter 2018, it reported EBITDA margin of 35.2%, up 170 basis points year over year. We believe the upside trend to have continued in the third quarter as well.

Subsequently, the consensus estimate for third-quarter earnings is pegged at 84 cents, reflecting 9.1% growth from the year-ago quarter.

Our Quantitative Model Doesn’t Predict 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 an Earnings ESP of +1.11% and a Zacks Rank #4, a combination that decreases odds of an earnings 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

 

Las Vegas Sands Corp. Price and EPS Surprise | Las Vegas Sands Corp. Quote

Stocks to Consider

Here are some companies from the same sector that are poised for an earnings beat this quarter.

Acushnet Holdings GOLF has an Earnings ESP of +28.57% and a Zacks Rank #3. The company is slated to report quarterly results on Nov 1.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Malibu Boats MBUU has an Earnings ESP of +3.64% and a Zacks Rank #1. The company is expected to report its quarterly numbers on Nov 6.

MCBC Holdings MCFT is scheduled to report quarterly results on Nov 8. The company flaunts a Zacks Rank #1 and has an Earnings ESP of +0.49%.

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
 
Malibu Boats, Inc. (MBUU) : Free Stock Analysis Report
 
MCBC Holdings, Inc. (MCFT) : Free Stock Analysis Report
 
Acushnet Holdings Corp. (GOLF) : Free Stock Analysis Report
 
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