Las Vegas Sands LVS is set to report its second quarter earnings later this week. The gaming company is coming off a relatively solid first quarter and is looking to continue this performance into the second quarter. The company has been one of the most susceptible to the ongoing trade dispute between the United States and China. Las Vegas Sands, as well as other companies like Qualcomm QCOM, Micron MU, and Wynn Resorts WYNN, all have over 60% revenue exposure to China. Companies like these have the most to lose from trade talks going haywire.
Despite ongoing trade tensions, shares of LVS are only down 4.2% over the past 12 weeks, and the stock has gained 23.3% year-to-date. Let’s take a look at the company and how they might stack up in the second quarter of 2019.
Overview and Q1 Performance
Headquartered in Las Vegas, LVS is a leading international developer of integrated resorts that primarily operate within the United States and China. Some of the properties the company operates in Las Vegas are The Venetian Casino, The Palazzo, and an Expo and Convention Center. In Asia, LVS operates properties in Macao, China, and one in Singapore. Some of the properties the company operates in Macao are Sands Macao, Four Seasons Macao, and The Parisian Macao. Marina Bay Sands is the lone resort that Las Vegas Sands operates in Singapore. The company’s heavy exposure to Macao helped boost its stock in early July when reports surfaced of gambling revenue rising 6% in June year-over-year.
In the first quarter of 2019, Las Vegas Sands brought in a total revenue of $3.6 billion, which was a 1.9% gain from Q1 2018. The company was able to surpass our revenue estimate by 4% in Q1. On the earnings front, Las Vegas Sands posted earnings of $0.91 per share, surpassing our Consensus Estimate by 7.06%.
The company’s Macao operations contributed $2.3 billion in Q1, which was an 8.1% year over year increase. The Venetian Macao lead the pack with $897 million in revenue in Q1 for a 3.3% jump from the year ago quarter. The Parisian Macao was a key player in driving growth for the company, as they have been able to consecutively increase their revenue the past five quarters (quarter over quarter). Marina Bay Sands in Singapore was able to generate $767 million in revenue in Q1 but fell 12% from Q1 2018. The Las Vegas operating properties attributed $471 million in Q1 as well.
At the moment, our year-over-year Consensus Estimates are calling for sales to increase 3.65% to $3.42 billion with a bottom-line increase of 9.46% at $0.81 per share. Our Key Company Metric Estimates are projecting for the Venetian Macao to bring in $882 million which would be a 6.3% increase from the year ago quarter. The Parisian Macao is projected to bring in $398 million in Q2 which would be a 7.3% jump from a year ago. The Marina Bay Sands in Singapore is forecasted to reel in $738 million in revenue for a 4.7% jump from Q2 2018. Furthermore, our Key Company Metric Estimates are calling for the company’s Las Vegas operations to bring in $435 million in Q2 for 8.2% year over year jump. The company’s earnings estimate revisions have been revised upward over the past 60 days.
Las Vegas Sands is currently sitting at a Zacks Rank #2 (Buy). Las Vegas Sands is coming off a solid first quarter, and the reported June revenue from Macao can help the company repeat its good performance in Q2. Macao is the company’s bread and butter, and their Macao properties have been vital for the company’s success thus far. LVS is planning on expanding their Macao portfolio with investments in new capital projects that can boost their Macao revenue but would ultimately make them even more vulnerable to trade disputes. Shareholders should keep their eyes on the progress being made towards a trade deal, as the outcome of the conflict will have significant repercussions for companies like Las Vegas Sands.
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