On Mar 13, 2013, we reiterated our long-term Neutral
Las Vegas Sands Corp.
) based on its attractive brand name, growing international
exposure and strong product pipeline. However, Las Vegas Sands'
fourth-quarter 2012 adjusted earnings per share lagged the Zacks
Consensus Estimate as well as the prior-year levels, which is a
major cause of concern.
Why the Reiteration?
Las Vegas Sands' attractive property locations and strong
brand recognition would help it enhance its performance once the
market demand improves. The company's RevPAR (revenue per
available room) was up in most of the resorts in 2012 and the
trend is expected to continue in 2013.
Las Vegas Sands is currently constructing Sands Cotai Central
resort project at the centre of the Cotai Strip. We believe Sands
Cotai Central has great growth potential and it will drive
visitations at Macau in the coming quarters.
Moreover, a majority of the company's revenues comes from its
Sands China property in Macau, which is witnessing higher growth
on the back of increased gaming volume, higher margin gain from
mass table and slot businesses as well as significant
contributions from the other non-gaming components. In addition,
after posting weak results in the past few quarters, the
company's business at Marina Bay Sands in Singapore appears to be
We also appreciate Las Vegas Sands' initiatives of repaying
shareholders handsomely through regular and special dividend
payments. The company recently raised its quarterly dividend by
40% to $0.35 per share for the first quarter of 2013. This
dividend hike will help enhance investor confidence.
Despite sturdy fundamentals, there are some drags that keep us
on the sidelines at the current level. Las Vegas Sands' business
in Las Vegas has been sluggish of late as is evident from the
decline in revenues in the past few quarters,owing to the
prevailing economic slowdown. Although Las Vegas Sands is
concentrating on the refurbishment and promotions of its Las
Vegas properties, its initiatives are not paying off.
Las Vegas Sands' upcoming project at Cotai in Macau will face
an extreme peer pressure from several Chinese casino operators
and other U.S.-based companies.
Wynn Resorts Ltd.
) is building a full-scale integrated resort on the Cotai at the
cost of around $3.5--$4.0 billion, which is slated to be
completed before the Chinese New Year in 2016. Another U.S.-based
MGM Resorts International
) has also received land approval in January 2013 to construct a
casino at Cotai. These new openings may pose a huge threat to the
company's business in the future.
Recently, Las Vegas Sands announced its plan to construct a
European integrated resort project - EuroVegas - in Madrid,
Spain, but only if the project provides 20% cash on return.
Considering the ongoing European market crisis, we remain
cautious on the successful execution of the project. Las Vegas
Sands now has a Zacks Rank #3 (Hold).
Other Stock to Consider
Another stock expected to perform well in the future is
Churchill Downs Inc.
) which carries a Zacks #2 Rank (Buy).
CHURCHILL DOWNS (CHDN): Free Stock Analysis
LAS VEGAS SANDS (LVS): Free Stock Analysis
MGM RESORTS INT (MGM): Free Stock Analysis
WYNN RESRTS LTD (WYNN): Free Stock Analysis
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