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Las Vegas Sands Hits 52-Week High

Zacks Equity Research

Shares of casino operator Las Vegas Sands Corp. (LVS) crafted a new 52-week high, touching $80.00 on Jan 2, 2014. The stock gained momentum after the Chinese government released solid 2013 gaming revenue results for Macao from where the company earns the majority of its revenues.

In fact, the company’s share price has been increasing ever since it reported impressive third-quarter results on Oct 17, 2013.

The casino operator closed the session at $79.58, yielding a solid year-over-year return of 67%. The trading volume for the session was 0.4 billion shares.

Despite hitting 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given its strong estimate revisions over the last 30 days and solid long-term potential.

Growth Drivers

Per China’s Gaming Inspection and Coordination Bureau, Macao recorded casino revenues of $45 billion in 2013, up 18.6% year over year, which was significantly higher than the year-ago level’s growth of 14%. The region recorded gaming revenues of $4.1 billion exclusively in the month of Dec 2013, reflecting an annual growth of 18.5%.

Las Vegas Sands generates 80% of its total revenue from its Macao properties. Hence, the company is expected to gain immensely from Macao’s solid sales growth.

Las Vegas Sands is the only casino operator which boasts as many as four properties in Macao. The visitation pattern in Macao is continuously growing. In third-quarter 2013, Las Vegas Sands welcomed nearly 16.7 million visitors, of which 8 million were in its premium property Venetian Macao alone.

The company continues to witness higher growth at its Macao properties on the back of increased gaming volume, higher margin gain from mass table and slot businesses as well as significant contributions from the important non-gaming components.

We believe the company’s Macao mass market and VIP business will receive a boost from the opening of The Parisian Macao and Sands Cotai Central resort in the Cotai Strip. This, in turn, will help the company to increase its market share in the region and augment business.

Macao, one of the largest and highly profitable gaming destinations in the world, is the only city in China where gambling is legal. The region’s increasing demand pattern and the flourishing mass market segment are expected to be the reason behind its higher revenue growth. Moreover, the improving economic condition in China is expected to be beneficial for the region’s casino business.

Shares of another casino operator MGM Resorts International (MGM) also reached a new 52-week high of $23.94 on Jan 2 following the release of strong sales performance in Macao where it has solid presence.

Other Stocks to Consider

Better-ranked gaming companies include Bally Technologies, Inc. (BYI) and Melco Crown Entertainment Ltd (MPEL). While Bally Technologies holds a Zacks Rank #1 (Strong Buy), Melco Crown Entertainment sports the same rank as Las Vegas Sands.

Read the Full Research Report on LVS
Read the Full Research Report on BYI
Read the Full Research Report on MGM
Read the Full Research Report on MPEL

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