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Las Vegas Sands Quarter Solid but Not Spectacular

It's another record quarter for Las Vegas Sands (NYSE: LVS  ) . Revenue reached a new high of $2.54 billion in the fourth quarter, and earnings per share increased 35.7% to $0.57 per share. To top it off, the company announced a new $1-per-share annual dividend. The company's solid performance continues.

Looking at the operating trends, there appears to be a big change going on in Las Vegas Sands. The company is transitioning from a growth machine to a steady operator with more stable, and less spectacular, results. The days of the eye-popping numbers are over, which may not be a bad thing.

Reading between the lines
The headline-worthy numbers of 26.3% revenue growth and adjusted property EBITDA growth of 30% look impressive, but when compared to third-quarter results they don't pop quite as much as we might expect from Las Vegas Sands.

Results have leveled off at Sands Macau, bouncing around in the same range for the last seven quarters. Four Seasons Macau grew EBITDA by just $3.3 million, shaking a string of strong sequential growth. And Marina Bay Sands grew EBITDA just 3.1% sequentially. Are we already seeing results plateau in Singapore?

This isn't to say that Las Vegas Sands is struggling; in fact, it is quite healthy. It is to say that growth appears to be slowing considerably and may settle in at the low double-digits. What I'll keep an eye open for over the next few weeks is whether the results are similar for competitors in Macau. Melco Crown (Nasdaq: MPEL  ) neighbors The Venetian Macau and is apparently losing market share there. Wynn Resorts (Nasdaq: WYNN  ) and MGM Resorts (NYSE: MGM  ) are neighbors to Sands Macau on the Macau Peninsula, so we may see growth slow there if Sands Macau's levels are any indication.

Too early for a Las Vegas recovery
Everyone is waiting for a Las Vegas recovery. Slowly, it's happening, with 9.3% revenue growth for the year, but flat property EBITDA of $80.9 million isn't the kind of profitable growth for which some were hoping. Most of the growth was from much stronger convention business. What is of concern is that gambling was down 2.9% from last year.

How this affects game-makers like International Game Technology (NYSE: IGT  ) will be interesting to watch. A refresh of games may pique interest, but if gaming revenue continues to flounder, then I have to question if casinos will be itching to replace equipment when the growth is in other areas.

Foolish bottom line
Results may have been unspectacular for Las Vegas Sands, but they were solid, something investors will have to get used to. The boom days of gaming's growth are coming to an end, and now it's time to focus on things like paying back shareholders and improving existing resorts.

While Las Vegas Sands' best growth may be behind it, I feel the opposite way about The Motley Fool's Top Stock for 2012. Our top pick for the next year is an emerging market retailer that's redefining its space and poised to become a retail powerhouse in the years ahead. You can uncover the pick in our special free report by clicking here. The report is free, but won't be forever, so access it now while you still can.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of International Game Technology. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (10) | Recommend This Article (6)

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  • Report this Comment On February 02, 2012, at 4:12 PM, cbotrader wrote:

    Please let me know when you and all the other writers finally decide to like Las Vegas Sands....

    I have a collection of hatchet pieces on this stock which you all stubbornly refuse to like.

    Meanwhile my purchase of LVS a few years ago has added several million dollars to my portfolio.

    As soon as you all starting writing about how great this stock is, I will immediately know the top has been put in and sell it,

    Just call me a "smiling fool".

  • Report this Comment On February 02, 2012, at 4:35 PM, cp757 wrote:

    Travis you have done a weak back handed compliment again but we are used to that. You said "Results may have been unspectacular for Las Vegas Sands, but they were solid, something investors will have to get used to. The boom days of gaming's growth are coming to an end, and now it's time to focus on things like paying back shareholders and improving existing resorts.This is almost the worst part of the artical.Did you listen to the conference call ? Adelson said We have applied to the government and submitted drawings for about a 4,000-room Lot 3 development. Now everybody, the analyst community, are giving points and value to MGM, to SJM, to Wynn, because they are in line to get lots and they don't have the lots yet. We own this lot; lot, stock and barrel. We paid for it years ago, and now we think that in consultation with the government, as to what they want, we're going to make a mass market plus a separate tower for VIP play on Lot 3. And so far, we're getting positive reaction on it'll be a thematic property, and we lead the path because we already own and paid for this lot. So we have the right to put the building up as soon as possible. The second item is that we have probably doubled the 38 VIP rooms with about 100 and some odd in the low hundreds tables. We've doubled that because of VIP demand in Cotai Central. I think the industry under appreciates the growth potential of Cotai Central because it's probably taken so long Michael Leven was asked about a slow down in china and he said" I think that in spite of the fact that a lot of the press is talking about slowdowns in China and all of these kinds of situation, we are essentially seeing nothing that would indicate that Macau and Singapore will not continue on their present paths upward. And our planning is, on that basis with our staffing and all of our marketing models, to go against those kinds of growth numbers. There's nothing that we have seen over the last number of months or see today that indicates that there isn't a positive outlook for all of our properties at this point. China has the best growth potential in the world and can afford to build a sea bridge from Hong Kong to Macau I don't think they would do that if they did not see the growth in Cotai Central.Travis I think you missed the part about the debut of the largest Integrated Resort development in the company's history, Sands Cotai Central, the first phase of which will open approximately eight weeks from today. Located at the center of the COTAI Strip and directly across from The Venetian Macao and the Four Seasons Hotel Macao and Plaza Casino, the 13.7 million square foot Integrated Resort will add substantial scale to the COTAI Strip and will feature amenities and attractions designed to broaden and deepen Macao's appeal as a destination for business and leisure travelers. Importantly, Sands Cotai Central will feature at completion more than 6,400 hotel rooms, which are a vital component for the future growth and continued maturation of the meetings, incentive, convention and exhibition business in Macao. We are confident that Sands Cotai Central will meaningfully contribute to important multi-night business and leisure visitation to Macao and will provide another strong platform for growth for our company.Do you think investors would like to know about that part of the Conference call.No other casino has any casinos coming on line for 4 years so Las Vegas Sands is the only game in the world for players to go to new casinos.Adelson is looking for more places to open and spent 700 hours on his airplane flying around the world to talk to heads of state about bringing his business development plan to their countrys. Adelson said Growth was his middle name and I believe he is sincere.

  • Report this Comment On February 02, 2012, at 4:48 PM, bornlazy wrote:

    Not a growth stock ?

    A new hotel will open in 8 weeks, A new resort will go up in Lot 3 as soon as possible. this "as soon as possible" is not waiting for land. The land is at Cotai Strip ! The land is owned, and paid for years ago. The lots that MGM, WYNN, and SJM are waiting for are still in their pipe dream. Even if they do get the land, the price of the land will be much much higher than LVS paid for.

  • Report this Comment On February 02, 2012, at 5:12 PM, spokanimal wrote:

    Travis, you're talking like a guy who's lamenting the fact that LVS did not make it's "whisper" number... like a guy who, as a result, is watching the stock suffer a disappointing drop.

    But the stock rose!... you should ask why, THEN write your article. Maybe you wouldn't have figured it out anyway, I don't know.

    So yes, Travis, your first guess is right. It was, indeed, the guidance. Heck, based only on Q4 results, if you were to "normalize" the earnings for the "good" luck LVS had at the tables, they wouldn't have even made that aggregate analyst estimates, let ALONE the whisper.

    Did all that flashy guidance really get today's market participants to forget Q4? maybe... there was the fully-booked junket suites at Cotai Central, there was the submitted, 4000 room design for lot 3, comments on Japan-et-al... sure... ALL those things.

    There was a much bigger one for me, however, that ooozes momentum that your article tossed under the bus... and that's market-share momentum.

    Recall that the nadir in share was September, at 14%... 10 full points below the 24% Sands was putting up in the spring of 2010. Then there was some 15% action in the fall and... say whahh? 16.5% in December... wow!

    But Travis, the Q4 numbers didn't reflect it!... what's a M.F. writer gonna do with THAT?

    The answer lies in understanding normalization.

    In any given quarter, share can be as much as 2% off due to normalization. In Sand's case, they were clearly lucky, as the Q4 income statement reveals, and the improved, Q4 market share is hearby christened, LUUCKKKKhh.

    But wait!... back to the "guidance" part, Travis. Who WAS that analyst last week who's channel check said that LVS put up a 19% market share in January, anyway?... heck, even if luck accounted for 2% of it, we're still talk'n 17% here, guy. Just what IS it that they're feeding those people in those brand new junket suites and premium-mass layouts, anyway?

    So the next thing you know, Mr. Adelson is CONFIRMING that channel check as FACT on the conference call... which I guess you weren't on, Travis... and the stock holds it's after market gains.

    Then again, maybe it WAS the dividend... getting half-way back from their 17-month market share drop in 4 months isn't noteworthy... the flat-lined, share price all last year was just that pesky Steve Jacobs stuff, right?


  • Report this Comment On February 02, 2012, at 8:16 PM, TMFFlushDraw wrote:

    Woah, chill out everyone. I didn't say buy or don't buy. In fact, I have an outperform rating on My CAPS for LVS, so there's my call.

    My point in this article is that the trajectory of LVS's results has changed dramatically from high growth, market shattering results, to more modest gains that will be fairly predictable quarter to quarter.

    When the rest of the gaming earnings come out I'll look at how valuation looks again and see if LVS is a "buy" or not.

    I will remind you that on November 29, the last time I did a "Best Stock in Gaming" article my pick was MPEL. Since then, MPEL is up 38.5% and LVS is up 16.9%. When I make a gaming call that underperforms, please let me have it then, otherwise, I'll point to my solid track record in picking the best gaming stocks.

    I will also point to the last "Buy LVS" article I remembered off hand on June 24, almost the exact bottom for the year. Got that one right too.

    I don't pay much attention to "luck", analyst expectations, or erroneous details that may tick results a point here or there. I look at valuation and trends in actual results. The trend is that LVS's results are slowing, particularly in Singapore.

    Just because I may not be jumping to buy shares today doesn't mean I didn't like LVS in the past. I bought shares at $2 when most were bailing. Over the past year I've liked MPEL more, as I've written many times. MPEL has performed MUCH better than LVS over that time.

    Travis Hoium

  • Report this Comment On February 03, 2012, at 1:20 AM, cp757 wrote:

    Travis I think you are wrong but you did come on to tell your side of the story. I think the arrogance in your writing shows through. When you say the boom days of gaming's growth are coming to an end you give no evidence and that's sad when someone says something as foolish as that without any support. I get it that you have no investment in the stock but to not tell the story about the future growth in Macau is just short sighted. I can go into all the future things to defend my position of future growth but you know all of those reasons. I know you don't want to go on record saying that Macau would do 37 billion or 40 billion in 2012 that would make you accountable to an opinion. and God forbid if you decided to predict that Macau would only do 34 billion and you where proven wrong.The shame. Its not like you haven't made bad picks in the past.Just support what you are saying with some facts if you think Macau revenue will be flat say it If you think revenue will only grow at 10% SAY IT . but say why, Back it up with facts.You will get less flack. Its just hard to put your neck out but thats what they pay you for.

  • Report this Comment On February 03, 2012, at 10:14 AM, TMFFlushDraw wrote:

    I said nothing about the macro picture in Macau. And I can't cover every little nuance in every article, as much as you guys want me to. This wasn't the article to make predictions about Macau growth, I was covering LVS's earnings.

    In a previous article I covered Macau growth and said I agreed with some analysts that 15% to 25% growth for 2012 is probably about right. You're right, I've never made exact prediction because that's a fool's errand. I would rather look at trends. For example, growth is slowing in Macau. How fast? We'll find out in the next couple of months. January revenue rose 34.8%, a very good start.

    If you want facts about why I wasn't giddy about LVS's quarter:

    Fact: Marina Bay Sands EBITDA grew 3.1% Q/Q

    Fact: Four Seasons Macau EBITDA grew 5.5% Q/Q

    Fact: Sands Macau has bounced between $69.8 million $95.6 million in EBITDA for the last two years, effectively not growing at all during that time.

    Fact: Las Vegas EBITDA was down 14.2% Q/Q and up a measly 0.4% Y/Y.

    If you read my article these are the facts I discuss. Now, Venetian Macau performed very well in the quarter, so that's the one big positive.

    As I said, the quarter was solid, but not spectacular. I think an objective view of these results would agree with that.


  • Report this Comment On February 03, 2012, at 11:17 AM, cp757 wrote:

    Travis your defense points to your arrogance , first you say"The boom days of gaming's growth are coming to an end " and then you say you are not saying anything about the "macro picture in Macau" Then you say you don't make prediction because that's a fool's errand. First you are a Fool that is something to be proud of and second we don't need someone to tell us the numbers that's an accountants job. You are an analysis with Motley Fool and you are better than some but you could be more bold .I feel like you are going to start ranting about how good your picks are and they are in your charitable trust pretty soon.You say Fact: Marina Bay Sands EBITDA grew 3.1% Q/Q that's a fact but not the whole picture. Sheldon Adelson said on the conference call he's in talks with the Singapore government to buy land adjacent to Marina Bay Sands resort to add an additional 1,000 to 1,500 rooms, as average occupancy rates are running above 90 per cent.They have to turn people away and the city is adding 10,000 rooms in 2012 to meet demand.WSJ says Marina Bay Sands reported S$3.72 billion in gross gaming revenue for 2011, equivalent to almost 50 percent of the total gaming win for the Las Vegas Strip over the 12-month period to November 30. These are what we call in the gambling business a TELL it helps if you want to win.

  • Report this Comment On February 03, 2012, at 11:55 AM, Pkylie wrote:

    Travis, going forward, Sands China growth as a percentage of ROI will slowdown significantly.

    Why ? Because there are only 200 gaming tables left out of the 2013 gaming table cap and how will lots 5 & 6 fare without the required number of gaming tables ? A $3.5 Bil investment generating a paltry return ?

    Also, Sands China growth this year alone has not matched the general growth rate in gaming in Macau.

    Of course, you can always choose to believe Sheldon Adelson about Lot 3, like what he promised about Condo Sales in Macau , Mall Sale at the MBS , etc etc. Sheldon Adelson is a pathological liar. The record is clear.

    Adelson should be locked up in a nursing home where he can spout lies to himself.

  • Report this Comment On February 03, 2012, at 12:37 PM, spokanimal wrote:

    Here is what Travis wrote:

    "The company is transitioning from a growth machine to a steady operator with more stable, and less spectacular, results. The days of the eye-popping numbers are over, which may not be a bad thing"

    ... after we got a report on, and then a confirmation of from Mr. Adelson, of this...

    We knew about the commentary we were getting from the junkets about the VIP initiative clear last june, we knew the suites were over-subscribed in November, and we saw the initial share surge in December.

    In a few months, we'll get the metrics that substantiate another LVS growth sprurt...

    ... for a company that last year planted the seeds and watched them sprout for 2012 results that will apparently be anything but a "steady operator".

    From his post above, I would suggest that Mr. Hoium has entered a paradigm shift that James Montier famously dubbed, the "outcome bias", which reads as follows:

    "We tend to evaluate decisions based on outcomes instead of probabilities. Thus, we congratulate ourselves for stupid choices that happen to turn out well and vow to never again make smart choices that happen to turn out badly. Thus, our errors get reinforced and our wise decisions rejected".


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