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Las Vegas Sands (LVS) Q3 Earnings: What's in the Cards?

Las Vegas Sands Corp.LVS is set to report third quarter 2015 results on Oct 21, after the markets close. Last quarter, the company posted a negative earnings surprise of 1.64%. The company has a four-quarter positive average earnings surprise of 0.28%. Let us see what is in store this quarter.

Factors to Consider

Las Vegas Sands' earnings and revenues have been missing the Zacks Consensus Estimate consistently over the past two quarters owing to a sluggish environment in Macau, a key operating region for Las Vegas Sands. In fact, revenues in Macau have plunged in double digits in all three months of the quarter due to the anti-graft corruption drive taken by the Chinese government. As a result, the VIP business in Macau has been affected considerably.

China's crackdown on illegal money transfers, credit growth issues, and tighter restrictions on visas have posed considerable threats to Macau's gaming revenues, raising concerns for companies like Las Vegas Sands. In fact, the latest decline for the month of September marked the 16th consecutive decline. Given the current scenario, the soon-to-be reported quarter is expected to be a tough one for the company.

We note that Chinese visitors account for more than 60% of Macau's traffic. Therefore, the weakening of yuan is likely to further contract Macau's gambling revenues as it is making it more expensive for Chinese gamblers to place their bets.

However, these negatives are expected to be partially offset by comparatively better performance at the mass market and non-gaming segments. Meanwhile, EBITDA margins are expected to continue to improve in the soon-to-reported quarter owing to the company's focus on mass and non-gaming segments that carry higher margins. Also, the company's properties at Las Vegas would leverage the benefits of the improving employment rate and other positive factors related to tourism in Las Vegas.

Earnings Whispers

Our proven model does not conclusively show that Las Vegas Sands is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP : Las Vegas Sands has an Earnings ESP of -1.59%. This is because the Most Accurate estimate stands at 62 cents while the Zacks Consensus Estimate is pegged higher at 63 cents.

Zacks Rank : Las Vegas Sands has a Zacks Rank #3 which increases the predictive power of ESP. However, the company's negative ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the gaming industry that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corporation BYD with an Earnings ESP of +20% and a Zacks Rank #1 (Strong Buy).

Penn National Gaming Inc. PENN with an Earnings ESP of +5.26% and a Zacks Rank #3(Hold).

Melco Crown Entertainment Limited MPEL with an Earnings ESP of +10% and a Zacks Rank #3.

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LAS VEGAS SANDS (LVS): Free Stock Analysis Report

BOYD GAMING CP (BYD): Free Stock Analysis Report

MELCO CROWN ENT (MPEL): Free Stock Analysis Report

PENN NATL GAMNG (PENN): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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