Las Vegas Sands Misses Earnings: Buying Opportunity?


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Las Vegas Sands delivered lower than expected earnings. But the company is still performing strongly, positooned for growth and atractively valued in comparison to peers such as Melco Crown and Wynn Resorts. Is short term weakness a buying opportunity in Las Vegas Sands?

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Las Vegas Sands Misses Earnings: Buying Opportunity?

  1. 1. Las Vegas Sands Misses Earnings: Buying Opportunity?
  2. 2. The Rundown ➢ Sales during the second quarter of 2014 increased 11.8% to $3.62 billion. The number was below analyst’s forecasts of $3.81 billion on average. ➢ Adjusted earnings per share came in at $0.85, a strong increase of 30.8%, but below forecasts of $0.90 per share. ➢ Weak performance in the VIP market was the main headwind during the quarter. This is due to reduced VIP gaming demand in China because of changing regulations and economic uncertainty. ➢ Should you buy Las Vegas Sands on short-term weakness or is it better to stay away from the company before things continue deteriorating?
  3. 3. Still Growing Strongly Source: Las Vegas Sands.
  4. 4. Weakness Was Concentrated in the VIP Market Source: Las Vegas Sands.
  5. 5. Outperforming the Competition “Our growth gaming revenue was up 12% versus the market that was up 5%. Two points to note here, firstly, our mass table and club revenues continue to grow ahead in the market. Secondly, during the period when VIP is experiencing a slowdown, our business makes us clearly more defensive than the overall market, as we have a much higher proportion of our growth gaming revenue on mass market revenue.” -- Sheldon Adelson, chairman and CEO Source: Las Vegas Sands.
  6. 6. The Mass Market Is the Main Growth Driver in Macao Source: Las Vegas Sands.
  7. 7. Macao Mass Market Keeps Firing on All Cylinders Source: Las Vegas Sands.
  8. 8. Strong Growth and Market Leadership in Macau Source: Las Vegas Sands.
  9. 9. Source: Las Vegas Sands.
  10. 10. Sales: Las Vegas Sands vs. Melco Crown and Wynn Resorts
  11. 11. Valuation: Las Vegas Sands vs. Melco Crown and Wynn Resorts Data Source: FinViz.
  12. 12. Foolish Takeaway ➢ Las Vegas Sands reported lower-than-expected sales and earnings; however, weakness was concentrated in the VIP segment. ➢ The company is still generating solid financial performance, and it has ambitious growth projects in Macau. Las Vegas Sands is also exploring opportunities in Japan, South Korea, and Vietnam. ➢ When compared to competitors such as Melco Crown and Wynn Resorts, Las Vegas Sands looks attractive in terms of growth and valuation. ➢ Buying the dip in Las Vegas Sands looks like a winning bet in the long term.
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