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Can Las Vegas Sands (LVS) Turn Around with Q3 Earnings?

Zacks

Las Vegas Sands Corp. LVS is likely to report third-quarter 2016 numbers on Oct 19, after market close. We expect the casino operator to beat expectations.

Last quarter, Las Vegas Sands posted a 7.14% negative earnings surprise. In fact, the company’s earnings lagged the Zacks Consensus Estimate in three of the last four quarters, with an average miss of 7.93%.

Let’s see how things are shaping up for this announcement.

LAS VEGAS SANDS Price and EPS Surprise

LAS VEGAS SANDS Price and EPS Surprise | LAS VEGAS SANDS Quote


Why a Likely Positive Surprise?

Our proven model shows that Las Vegas Sands is likely to beat on earnings because it has the perfect combination of the two key ingredients.

Zacks ESP: Earnings ESP for Las Vegas Sands stands at +1.70% because the Most Accurate estimate is 60 cents while the Zacks Consensus Estimate is pegged lower at 59 cents. A favorable Earnings ESP serves as a meaningful indicator of a likely positive earnings surprise.

Zacks Rank: Las Vegas Sands currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Las Vegas Sands’ Zacks Rank #3 and +1.70% Earnings ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-than-Expected Earnings?

Las Vegas Sands has been reporting lower-than-expected revenues over the past eight quarters due to sluggish performance in Macau, its key operating region.

However, per the Macau Gaming Inspection and Coordination Bureau, though gross gaming revenues (GGR) for the month of July fell 4.5%, it rose in August and September by 1.1% and 7.4%, respectively, on a year-over-year basis, indicating that the Macau market might be on the recovery path. Moreover, the opening of Las Vegas Sands’ subsidiary Sands China Ltd.’s The Parisian on Sep 13, is likely to have attracted tourists and leisure gamblers.

We thus expect the company to mark a turnaround in the Macau region in the to-be-reported quarter.

Meanwhile, comparatively better performance at the non-gaming segments and growth in mass markets are expected to boost third-quarter margins. Also, the company’s focus on renovation and promotion of its Las Vegas properties should lead to high occupancy rates and continue driving segmental performance.

Stocks to Consider

Las Vegas Sands is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Live Nation Entertainment, Inc. LYV has an earnings ESP of +7.84% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mattel, Inc. MAT has an earnings ESP of +1.43% and a Zacks Rank #1.

Boyd Gaming Corporation BYD has an earnings ESP of +20% and a Zacks Rank #2.

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