Casino operator Las Vegas Sands (LVS, quote) reported its highest ever quarterly earnings last week. Is now the time to jump into this stock?
The Sands Macau
Thanks to impressive numbers from its Macao operations, Las Vegas Sands saw quarterly net revenues increase 19.5% year-over-year during the busy Chinese New Year Season. Importantly, results from the Sands China division jumped 39% from the same quarter a year earlier.
The company’s fantastic Macao numbers were bolstered by both its flagship Venetian property and the opening of its newest development, Sands Cotai Central. The latter provided Las Vegas Sands with an additional $587.2 million in net revenue and is an integral component of the company’s strategy to capture additional mass market gamers.
As well, Las Vegas Sands’ American assets reported incremental growth – 7% in Las Vegas and 6% in Pennsylvania.
However, the quarter for Las Vegas Sands had some blemishes: some of the firm’s other properties around the world are not performing as well as its Macanese ones. Marina Bay Sands, the company’s Singapore offering, saw a 6.3% decline in net revenue. Although Las Vegas Sands would ideally like to see growth in the Singaporean market, Marina Bay Sands is still a lucrative asset, bringing in $795 million in net revenues.
Unsurprisingly, Las Vegas Sands has seen a steady increase in the value of its stock since reporting earnings. However, the equity appears to be running into a bit of short-term resistance at the 57.8 level. If the stock can close above 58, we could see Las Vegas Sands test its 2011 high in the low 60’s.
For long-term investors, the Macao gaming story remains a compelling one; in particular, Las Vegas Sands, with its multiple assets on the Cotai Strip and its advantageous position in the mass market sector, could be a winner. However, if the growth rate in the Chinese economy falls further, Las Vegas Sands could be adversely affected.
Author is long LVS