Las Vegas Sands is set to release its Q2 2024 results, with revenues expected to be around $2.85 billion, up 11% from last year. Earnings are projected to be approximately $0.60 per share, a 30% increase from the previous year, driven by a rebound in Macau and strength in Singapore. Macau has seen a strong resurgence in tourist arrivals and spending, with Sands benefiting from pent-up demand. Despite a focus on the lower end of the market, the company may see slower growth compared to competitors like MGM and Wynn, who target the premium mass market. Marina Bay Sands in Singapore remains a top profit driver, with strong tourist inflows and new suite rooms boosting performance.
While Las Vegas Sands stock has declined by 25% over the past few years, it has not been a consistent decrease. Returns for the stock were -37% in 2021, 28% in 2022, and 2% in 2023, underperforming the S&P 500 in 2021 and 2023. In contrast, the Trefis High Quality Portfolio, with 30 stocks, has outperformed the S&P 500 each year. The current uncertain macroeconomic environment, with high oil prices and elevated interest rates, raises questions about whether LVS will underperform the S&P in the next 12 months or see a recovery.
Las Vegas Sands is expected to see continued financial improvement as demand in Macau grows, with per-capita spending on the rise. Singapore’s stable and high-value market is also likely to drive strong performance for the company. With an investment of $1.75 billion into the Singapore property to attract high-value tourism, Las Vegas Sands’ liquidity position is in good shape, with cash holdings of around $5 billion as of March 2024. However, the company is highly leveraged, with $13.9 billion in total debt outstanding, and concerns about the Chinese economy could pose a risk.
The company is valued at around $55 per share, about 31% higher than the current market price. Post-Q2 earnings, the valuation of Las Vegas Sands stock will be revisited. Despite the risks associated with the Chinese economy and high leverage, the company’s focus on high-value markets and investments in its properties are expected to drive continued growth. The performance of LVS stock over the next year will be closely monitored to see if it can outperform the S&P 500 and bounce back from recent fluctuations.
