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General Motors (GM) and Las Vegas Sands (LVS): Growth & Income Stocks

Brian Hamilton
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Over the past week the financial news cycle has been dominated by the expanding tariff war between the U.S. and China, and technology data privacy issues.  But while those two items have been getting most of the headlines, there has been some very positive reports regarding both General Motors (GM), and Las Vegas Sands (LVS). Each company has had several important data points mostly brushed under the rug, but that does not mean the data was not important to their long term growth stories. 

On April 3rd, the March motor vehicles report was released, and overall the data was much better than expected.  Total vehicle sales came in at 17.5 million, well above the expected reading of 16.9 million.  Moreover, domestic vehicle sales totaled 13.7 million, ahead of the 12.9 million consensus estimate.  This strong sales month reversed the downturn that had been in place for the past 3 consecutive months.  It was believed that increasing interest rates, and the millions of nearly new vehicles coming off lease would continue to dampen the appetite of new buyers. 

This vehicle sales bounce back was led by General Motors GM, who reported selling 296,341 crossover, truck, and car deliveries in the U.S for the month of March.  This was a banner month for the company, as it was the best March in GM’s history.  Further, total sales were up +16% as Buick had its best March since 2004, Chevrolet had its best March since 2007, and Cadillac posted its best March since 2014. 

General Motors also posted a +14% YoY improvement in retail sales, and increased its retail market share to 17.7%; its biggest percentage since 2009.  Chevrolet was also recognized as the industry’s fastest growing full line brand. 

On a segment basis, the company posted some impressive March year over year sales numbers as well; Buick crossovers +50%, Chevrolet crossovers +39%, GMC crossovers +42%, Cadillac XT5 +17%, Cadillac Escalade +14%, Chevrolet Silverado +24%, Chevrolet Colorado +52%, GMC Canyon +9%.  The company’s electric vehicle division also saw some positive traction as Bold EV deliveries totaled 1,774 in March. 

After the report was released, Kurt McNeil, U.S. vice president, Sales Operations, stated, “March was an exceptional month for us. A growing economy and strong new products helped us execute a very successful plan to conquest customers from other brands. Once customers purchase a GM product, they tend to stay in the family as we deliver an award-winning ownership experience that is hard to beat.

Las Vegas Sands LVS had two recent news items that will help the company both in the near and long term.  First, the casino operator announced that they sold their Bethlehem, Pennsylvania casino for $1.3 billion to Wind Creek Hospitality, an affiliate of Poarch Band of Creek Indians of Alabama.  This was a sizable gain from its cost of $743 million when it built the property in 2009.  Further, Sheldon Adelson, CEO, had been trying to divest the company of its Pennsylvania exposure due to a new state law that legalizes online gambling later this year.

Even more important to LVS investors was the March Macau gaming numbers; this data showed that sales leaped up by +22.2% to $3.2 billion, well above the expected growth range of 13-18%.  The report also revealed that demand for gambling in the region remained high as March was the 20th consecutive month of gains in Macau.  While impressive numbers, March’s data was still below the highs reached in 2014, but the data is trending in the right direction.

You can see the correlation between the success in Macau and LVS’s stock price, in the graph below.  In 2014, Macau gaming receipts peaked (as did LVS’s stock price), and then gaming revenues began to decline all the way to 2016.  In 2016, gaming returns began to pick up, and so did LVS’s stock price.  So, basically stated, as Macau does well, so does Las Vegas Sands.

Las Vegas Sands Corp. Price, Consensus and EPS Surprise

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

Las Vegas Sands has invested a lot of money into the region, and is expected to begin the redevelopment of Sands Cotai Central casino resort into The Londoner Macao.  Mr. Adelson stated, “The Londoner Macao will feature dynamic new attractions and features from London including some of London’s most recognizable landmarks, an expanded and reimagined retail mall and 350 luxurious new suites, the St. Regis Tower Suites.”

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