Check out the latest Las Vegas Sands earnings call transcript.

Las Vegas Sands (LVS -0.45%) has long been the biggest player in the world's largest gaming market, Macau, and that's made it a huge winner for investors. The company built Sands Macau shortly after the market opened to foreign companies and is now the biggest operator in the region known as the Cotai Strip, the equivalent of the Las Vegas Strip in Asia. 

But in 2018, Las Vegas Sands faced stiff competition from rivals like Wynn Resorts (WYNN 0.90%) and MGM Resorts (MGM 0.80%), which recently completed resorts in Macau. Despite this, Las Vegas Sands continues to grow in Macau, generating billions in cash along the way. How has it held up and why is its stock dropping in the meantime? 

Skyline of Macau from the water.

Image source: Getty Images.

Macau had a great 2018

In the fourth quarter of 2018, Macau's gaming revenue was up 8.9% to $9.8 billion, capping a year when gaming revenue rose 14% to $37.6 billion. Incredibly, Las Vegas Sands grew revenue 9.7% to $2.46 billion in the fourth quarter and increased it 14.2% for 2018 to $8.69 billion. Property EBITDA was up 7.7% in the quarter to $786 million and grew 18.1% to $3.08 billion for the year. 

The reason Las Vegas Sands held up well is that it's focused on the mass-market player. In 2018, mass-market gaming win was up 16.7% compared to only a 10.9% gain in the VIP market. Las Vegas Sands was playing the right market. The only downside is Las Vegas Sands lost market share in mass-market play, but that's likely due to MGM and Wynn stealing some players in the Cotai region. 

No love for Las Vegas Sands?

If Las Vegas Sands is holding overall market share and generating billions in cash in Macau, why is the stock down 25.5% over the past year? 

LVS Chart

LVS data by YCharts.

The blame lies with Marina Bay Sands in Singapore, which saw an 11.6% drop in revenue in the fourth quarter to $726 million and a 20.8% decline in property EBITDA to $362 million. Both are huge figures for any resort, but they're down significantly from the previous few years when Marina Bay Sands was generating around $500 million per quarter in EBITDA. 

Macau and Singapore casinos' growth normally correlates, but in 2018 they diverged for Las Vegas Sands. It's the decline in Singapore that explains the stock having a bad year. 

A value in the world of gaming

Given Las Vegas Sands' continued strength in Macau during 2018, I think we're seeing the company's long-term strategy to target conventions, meetings, and the mass market paying off. It has more hotel rooms than any other company in Macau and more gaming space than competitors, which will limit any market-share losses in the mass market.

That Macau strength drives the company's cash flow and its 5.4% dividend yield, making Las Vegas Sands a value in gaming today.