Las Vegas Sands Remains an Easy Bet

The gaming giant continues to sail ahead with Macau's winds at its back. With another round of record results under its belt and even better times ahead, what's there not to like?

May 3, 2014 at 10:00AM

Perhaps predictably at this point, Las Vegas Sands (NYSE:LVS) reported a record quarter last week on the back of robust growth in Macau -- a story that has been on the lips of every gaming analyst for a decade, yet is still delivering. Las Vegas Sands is a giant in the industry, not only by market cap and earnings, but also by sheer number of hotel rooms, slot machines, tables, and resorts around the world. The company is growing at a truly incredible rate, justifying its rich earnings multiple. With plenty of new opportunities on the horizon and continued outperformance in the gold mine that is Macau, however, investors can still make a mint on this one.

For its first fiscal quarter, Las Vegas Sands brought in more than $4 billion in sales -- a completely absurd amount of money and a record for the company. Adjusted Property EBITDA, driven by Macau, grew roughly 50% year over year to $940 million. At the end of the income statement, the company hauled in 36.6% higher earnings than in the year-ago period, reaching $0.97 per share and setting yet another company record for the first quarter.

In three months, 17 million people came through the doors of Las Vegas Sands' Macau-based casinos. The Venetian Macau saw its sales rise 35%, with both gaming and non-gaming revenue soaring well into the double digits. The Sands Cotai (the Cotai Strip is the equivalent of the Vegas Strip) generated nearly 5 million visits alone, and delivered even more attractive results on the income statement, with an EBITDA margin north of 30%. Shopping revenue growth at the stores appears less robust than at the older property, but gaming is climbing at an incredible rate -- 40.6% in the just-ended quarter.

For Las Vegas Sands' various resorts and casinos in Macau, sales and earnings were altogether terrific. Back home, things were predictably slower. Las Vegas gaming revenue was down more than 31% compared to 2013's first quarter. Really, though, the U.S. hasn't been part of Las Vegas Sands' story for some time. This business takes place in Asia.

Good times are a-rollin'
Macau growth will slow eventually as the market matures. A Sterne Agee analyst recently pegged full-year 2014 growth at 14%-16%, as compared to 2013's 18.6% regional growth rate. Citi thinks the number could be as high as 22%.

Las Vegas Sands has plenty to gain in the coming years from its existing resorts and under-construction ones. The Parisian Macau, slated for a late 2015 opening, will substantially increase capacity and capture even greater market share for the company for years to come.

Beyond Macau, the company has the potential to tap into other Asian markets -- Japan, Taiwan, and Singapore, specifically. The last of the three is already generating meaningful revenue, with an adjusted property EBITDA of $435.2 million in the first quarter. Legislation in the other two areas is pending. If those floodgates open, Las Vegas Sands and its peers will have decades more growth to enjoy, and investors will undoubtedly benefit in time.

With a 43% year-over-year dividend hike and substantial capital appreciation in the recent past (and likely going forward), Las Vegas Sands is a stock that many can love. It's an income-earning growth stock with strong emerging market presence and a rock-solid core base. With the exception of bargain hunters, this is a great business to own for nearly any investor.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Michael Lewis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information