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Will High Margins Drive Las Vegas Sands' (LVS) Q1 Earnings?

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Las Vegas Sands Corp. LVS is slated to release first-quarter 2018 financial numbers on Apr 25, after market close.

The company’s scale and diversity owing to its gaming and non-gaming services, are expected to have benefited revenues and earnings in the to-be-reported quarter. While relentless expansion efforts are likely to reflect in the first-quarter revenue numbers, the non-gaming segment’s higher margins are expected to boost earnings of the company.

Also, the company’s shares have rallied 27.8% in the past year, outperforming the industry’s gain of 25.4%.


Let’s see in detail how the company’s top and bottom line will look like in the first-quarter results.

Encouraging Top-Line Picture

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 first quarter.

Consequently, the Zacks Consensus Estimate for first-quarter revenues is pegged at $3.34 billion, reflecting 7.5% year-over-year growth. Also, net revenues in 2017 increased 12.5% from a year ago, indicating an upward trend in overall revenues.

Coming to the company’s Macao business, the consensus estimate for first-quarter revenues in the Venetian Macao reflects 11.1% year-over-year growth. Sands Cotai Central revenues are expected to grow 9.2% in the first quarter from a year ago. Further, The Plaza Macao and Four Seasons Hotel Macao revenues are expected to witness 21.7% year-over-year growth in the first quarter of 2018.

Las Vegas Sands aims to benefit from structural growth in Macao. In fact, the fourth quarter of 2017 marked strong results in Macao with robust growth metrics across the gaming and non-gaming segments. This trend is expected to reflect in the first-quarter results as well.

However, for Las Vegas operations, the consensus estimate for first-quarter revenues is pegged at $406 million, reflecting a decline of 6.5% year-over-year. Nevertheless, 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 are expected to 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 86 cents per share, reflecting 30.3% 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 #3 and an Earnings ESP of +2.84%, a combination that increases the 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

 

Other Stocks to Consider

Here are a few other stocks from the same industry that are poised for an earnings beat this quarter.

Wynn Resorts WYNN holds a Zacks Rank #3 and has an Earnings ESP of +0.62%. The company is scheduled to report quarterly results on Apr 24. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boyd Gaming BYD carries a Zacks Rank #3 and has an Earnings ESP of +2.44%. The company is expected to report quarterly numbers on May 1.

Red Rock Resorts RRR holds a Zacks Rank #3 and has an Earnings ESP of +1.37%. The company is anticipated to report quarterly results on May 3.

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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
 
Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
 
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
 
Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
 
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