Will Macao Revival Drive Las Vegas Sands' (LVS) Q3 Earnings?

Las Vegas Sands Corp. (NYSE:LVS) is slated to report third-quarter 2017 numbers on Oct 25, after market close.

Last quarter, the company surpassed the Zacks Consensus Estimate for earnings owing to an improvement in revenues.

Also, Las Vegas Sands has a decent earnings surprise history. Evidently, the company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 10.88%.

Las Vegas Sands Corp. Price and EPS Surprise

Las Vegas Sands Corp. Price and EPS Surprise | Las Vegas Sands Corp. Quote

However, the Zacks Consensus Estimate for current-quarter earnings of 67 cents reflects a year-over-year decline of nearly 7%.

Also, a look at the company’s price performance shows that it underperformed the industry. Shares of Las Vegas Sands have gained around 0.4% for the three-month period (ended Sep 30, 2017), underperforming growth of 5.5% recorded by the industry.



Will the upcoming earnings release give a boost to Las Vegas Sands’ stock? Well, this depends largely on whether the firm is able to post a beat in the third quarter.

Our proven model shows that Las Vegas Sands has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat in the third quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate is pegged at +3.73%. This is a major indicator of a likely positive earnings surprise.

Zacks Rank: Las Vegas Sands’ Zacks Rank #3 when combined with a positive ESP makes us reasonably confident of an earnings beat.

Also, the Zacks Consensus Estimate for revenues of $3.12 billion for the to-be-reported quarter reflects year-over-year growth of 5.1%.

Factors Likely to Affect Q3 Results

Per Macao’s Gaming Inspection and Coordination Bureau (“DICJ”), gross gaming revenues (GGR) rose in all the three months of the quarter. This, in turn, indicates that the casino hub is firmly on its path to recovery. In fact, Macao’s VIP numbers is reported to have witnessed 35% expansion in the quarter, with VIP baccarat leading the surge of casino GGR.

The company’s Macao operation is thus set to experience strong growth in both the VIP segment and mass gaming revenues in the to-be-reported quarter, given the improved operating environment there.

Particularly, its industry-leading Cotai Strip property portfolio in Macao is witnessing strong visitation and higher hotel occupancy rates buoyed by the addition of The Parisian Macao. In fact, the resort is expected to have continued attracting tourists and leisure gamblers, thereby boosting up revenues in the to-be-reported quarter.

We note that the Zacks Consensus Estimate for revenues at The Venetian Macao and Sands Cotai Central is pegged at $709 million and $461 million, reflecting a sequential rise of 3.2% and 3.6%, respectively.

However, stringent capital controls by the Chinese government and increased audits of the junket industry by DICJ in order to stop money laundering might have somewhat restricted gaming revenues in Macao. Also, excess supply, especially in the Macao market, is likely to reduce Las Vegas Sands’ market share and weigh on results.

Meanwhile, the company’s focus on renovation and promotion of its Las Vegas properties are likely to result in high occupancy rates, besides driving segmental performance. In fact, the Zacks Consensus Estimate for Las Vegas Operations’ revenues is pegged at $400 million, reflecting an increase of 4.2%, on a sequential basis.

Stocks That Warrant a Look

Here are some stocks that you may want to consider as according to our model, these have the right combination of elements to post an earnings beat this quarter.

Penn National Gaming, Inc. (NASDAQ:PENN) has an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wynn Resorts, Limited (NASDAQ:WYNN) has an Earnings ESP of +3.38% and a Zacks Rank #2.

Eldorado Resorts, Inc. (NASDAQ:ERI) has an Earnings ESP of +15.79% and a Zacks Rank #3.

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