Why it's an Advantage to "Normalize" your Perspective
I just got through reading the piece from IBD from a couple hours ago. In it, they mentioned that LVS's Earnings were down 5% last quarter and that analysts anticipate that it will be down 6% in the current quarter.
To the casual reader, that doesn't look good. Better pick another stock.
What wasn't said was that LVS's "luck" (aka "table hold") was lousy last quarter and fabulous in Q1 of 2012... the quarter against which THIS quarter will be measured against for year-over-year comparison.
Unlike IBD, analysts (and many on this board) have been digging below the EPS number to find reasons. I've spoken ad-nauseum about how Marina Bay's 64% surge in VIP gaming volumes was countered by the worst table hold in the resort's history last quarter to wipe out more than $100 million in EBITDA. Of course, "volumes" are indicative of it's business and attractiveness to patrons whereas table hold is just a measure of "luck".
There was also the "phased" opening of Cotai Central, which allowed expenses (and even some stealth cap-ex) from un-opened phases to be absorbed by the revenues of those that were open... but that certainly doesn't allow Cotai Central's EPS to look all that great as it's volumes ramp up.
Even Marina Bay's bad-debt reserves were arguably padded as the company recognized that Q3 and Q4 were throw-away quarters anyway. Why not throw the kitchen sink in there if it gets them all out of the way and clears the deck for 2013... when everything will be open anyway... including all the newly-refurbished junket suites which should have finally been completed in February.
As much as many of us take "normalization" for granted in the casino industry, it's still amazing how EPS numbers in an article like the IBD one simply DON'T qualify what they're saying with table-hold disparities. They do it with "same store" dialogue in the retail sector... I don't know WHY they don't in gaming.
But in the end, it's to our advantage to appreciate what others don't.
The buyers that pushed LVS to it's current price (and high P/E ratio) are the pros who understand the metrics below the EPS numbers. IBD's "accumulation/distribution" metric on LVS stock is above 90, which is clearly saying that "large-block" trades (eg: professional investors) are mostly up-tick trades vs down-tick trades whereas small block trades (smaller-retail investors) are what are keeping the stock from moving substantially higher.
The "new buyers" that you speak of will be those smaller traders who will react positively once EPS eventually spikes. It is they who will be necessary to take this company from it's current "mature" phase of Sir John Templeton's mantra to the "euphoric" phase and eventually provide guys like me with a selling opportunity... but clearly, not yet.