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Las Vegas Sands (LVS) Up 9.1% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
Bank of NT Butterfield & Son (NTB) delivered earnings and revenue surprises of 3.26% and -3.56%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

It has been about a month since the last earnings report for Las Vegas Sands (LVS). Shares have added about 9.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Las Vegas Sands due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Las Vegas Sands Misses Q4 Earnings & Revenue Estimates

Las Vegas Sands reported disappointing fourth-quarter 2018 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate. While the bottom line lagged the consensus mark for the fourth straight quarter, the top line fell short of the same for the second successive quarter.

In the reported quarter, adjusted earnings came in at 77 cents per share, which declined 12.5% year over year and lagged the Zacks Consensus Estimate of 86 cents. Net revenues of $3,475 million missed the consensus mark of $3,499 million but improved 2.5% on a year-over-year basis.

Notably, top-line growth in the quarter was primarily driven by increased revenues at casino, rooms and mall. It generated solid revenues from Macao operations as well.

Meanwhile, Las Vegas revenues declined in the quarter. At the moment, the company is focusing on expanding the Four Seasons Tower Suites Macao, St. Regis Tower Suites Macao and the Londoner Macao to enhance its resort portfolio.

Asian Operations

Las Vegas Sands’ Asia business includes the following resorts:

The Venetian Macao

Net revenues increased 11.8% year over year to $919 million on a 12.5% rise in casino revenues, 5.7% growth in rooms revenues and 10.2% improvement in mall revenues. Revenues from convention, retail and other also rose 28%. However, food and beverage revenues declined 9.5%.

Adjusted property EBITDA was up 9.6% year over year to $355 million in the quarter under review.

Non-rolling chip drop increased 15.4%, whereas rolling chip volume improved 17.1%.

Sands Cotai Central

Net revenues inched up 1.3% year over year to $558 million driven by a 0.2% increase in casino revenues, 2.4% rise in rooms revenues, 40% improvement in mall revenues and 14.3% growth in convention, retail and other revenues. In the meantime, food and beverage revenues fell 10.7% from the year-ago level.

Adjusted property EBITDA was $194 million, down 4% year over year.

While non-rolling chip drop declined 2.3%, rolling chip volume surged 22.1%.

The Parisian Macao

Revenues amounted to $414 million, mirroring an increase of 29% year over year. The upside can be mainly attributed to 37.5% rise in casino revenues and 13.3% surge in food and beverage revenues. However, rooms and mall revenues slumped 2.9% and 12.5%, respectively.

Adjusted property EBITDA improved 48.3% year over year to $132 million.

Non-rolling chip drop improved 11.7%, while rolling chip volume rose 25.3%.

The Plaza Macao and Four Seasons Hotel Macao

Net revenues inched up 0.6% to $175 million on 29.7% increase in mall revenues. Nevertheless, casino revenues declined 8.5%. Casino, food and beverage as well as convention, retail and other remained flat year over year.

Adjusted property EBITDA decreased 9.9% to $64 million.

Rolling chip volume increased 26.4%, while non-rolling chip drop fell 11.3%.

Sands Macao

Revenues were up 4% year over year to $156 million owing to a 5.9% gain in casino revenues and 25% rise in rooms revenues. However, food and beverage as well as convention, retail and other revenues declined 12.5% and 100%, respectively.

Adjusted property EBITDA declined 5% to $38 million.

Rolling chip volume was up 11.6%, non-rolling chip drop increased 2.4%.

Marina Bay Sands, Singapore

Net revenues fell 11.6% year over year to $726 million due to a 17.6% decline in casino revenues. On the flip side, rooms revenues as well as convention, retail and other revenues rose 4.4% and 8.3%, respectively. Mall as well as food and beverage revenues also increased a respective 8.5% and 3.8%.

Adjusted property EBITDA in the quarter was $362 million, down 20.8%.

Both non-rolling chip drop and rolling chip volume declined 6.2% and 13.9%, respectively.

Domestic Operations

Las Vegas

Net revenues from Las Vegas operations, which comprise The Venetian Las Vegas and The Palazzo including the Sands Expo and Convention Center, decreased 2.1% to $424 million on a 13.6% and 4.5% respective fall in casino revenues and food and beverage. Convention, retail and other revenues also saw a 1% decline. However, rooms revenues increased 7.3%.

Adjusted property EBITDA in the quarter totaled $100 million, down 12.3% on a year-over-year basis.

Table games drop increased 38.1% and slot handle rose 8%.

Sands Bethlehem

Net revenues totaled $128 million, down 7.2% year over year on an 8.3% decline in casino revenues. Meanwhile, revenues from food and beverage, rooms, mall as well as convention, retail and other revenues remained flat in the quarter.

Adjusted property EBITDA in the quarter fell 29.4% to $24 million.

Table games drop declined 3.5%, while slot handle rose 1.4%.

Operating Results

On a consolidated basis, adjusted property EBITDA was down 4.7% year over year to $1.27 billion in the fourth quarter. The downside can be attributed to a decline in adjusted EBITDA from the Marina Bay Sands, Las Vegas Operating Properties and Sands Bethlehem businesses.

Adjusted net income increased 14.6% year over year to $598 million.

Balance Sheet

As of Dec 31, 2018, unrestricted cash balances were $4.65 billion. Total debt outstanding, including the current portion and net of deferred financing costs along with original issue discount, summed $11.97 billion.

In the reported quarter, capital expenditures amounted to $326 million. This was mainly owing to construction, development and maintenance activities of $184 million in Macao, $66 million at Marina Bay Sands, $70 million in Las Vegas and $6 million at Sands Bethlehem.

Quarterly dividend paid by the company was 75 cents per share, while it repurchased $430 million of its common stock.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.07% due to these changes.

VGM Scores

Currently, Las Vegas Sands has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Las Vegas Sands has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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