Lvs Sands Macau
Image: Las Vegas Sands.

The Asian gaming capital of Macau has been a tough place to do business lately, and as the first major U.S. operator to make its way to Macau, casino resort operator Las Vegas Sands (NYSE:LVS) has felt the pinch. Sands will release its third-quarter financial report on Wednesday, and investors in Las Vegas Sands are hoping that after last week's report from Wynn Resorts (NASDAQ:WYNN), what Sands says will be somewhat more encouraging. Let's look more closely at Las Vegas Sands and Wynn Resorts to get a sense of what we're likely to see later this week.

Stats on Las Vegas Sands

Analyst EPS Estimate

$0.64

Change From Year-Ago EPS

(24%)

Revenue Estimate

$2.97 billion

Change From Year-Ago Revenue

(15.8%)

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Can Las Vegas Sands break its losing streak with analysts?
For two quarters in a row, Las Vegas Sands has fallen short of what investors have expected from it at earnings time, and similar concerns have led shareholders to cut their views on Las Vegas Sands earnings in recent months. Reductions of 2% to 4% in full-year 2015 and 2016 projections reflect the ongoing lack of clarity about Macau, and after a rough start to the year, Sands stock has fallen another 8% since mid-July.

Investors don't need to look any further than Sands' second-quarter results to see the strain that the company has been under lately. Overall revenue dropped 19% year over year, with an even bigger drop of 28% at the key Venetian Macao resort. Substantial declines in average daily room rates and occupancy rates further exacerbated the impact of losing VIP patrons to the controversial government crackdown on money laundering. Even outside Macau, poor performance in Singapore and falling operating income in the company's Las Vegas properties capped an ugly report that was even worse in some respects than pessimistic investors had already expected.

This quarter, the same headwinds seem to be hitting the casino industry. Wynn Resorts reported its results last week, and it suffered a 27% hit to its revenue that cut its profits by more than 60%. Wynn's Macau unit took even more punishment than the rest of the company, with sales plunging almost 38%. As Wynn's market share has fallen, uncertainty about the fate of its Wynn Palace on the Cotai Strip becomes even more troubling, as the resort is expected to be ready to open next spring but hasn't yet received an allocation for table games.

For Las Vegas Sands, the table-game allocation process will have an impact on its Parisian Macao project, which it also hopes to open next year. Yet the government's apparent regulatory clampdown on expansion efforts could have mixed effects on Sands because the company already has a dominant presence in Macau. If table-game limits essentially preserve the status quo, then Las Vegas Sands could retain its competitive advantage over Wynn Resorts and other players in the Macau market, and that might turn out to be a long-term positive if the Asian gaming capital rebounds along with the regional economy as a whole.

Yet investors have finally started to get at least somewhat more optimistic about Macau's prospects. Earlier this month, one Chinese official said that its government was looking at ways to try to help boost the Macau economy's prospects. One interpretation of that comment was that China might simplify its visa process in order to ease the flow of tourists from the mainland or even let up on its VIP inquiries. Even though share prices bounced sharply as a result, any actual changes obviously won't show up on Sands' third-quarter numbers.

When Las Vegas Sands releases its latest financial report, be sure to look not only at the company's raw numbers but also at how they compare to Wynn Resorts. With indications that Wynn might be losing market share, Sands could end up being a beneficiary of Wynn's troubles. In a market that's contracting overall, that's not necessarily news to celebrate, but at the very least, it would suggest that Las Vegas Sands is positioning itself to take maximum advantage of a rebound in the Macau market -- whenever it comes.

Dan Caplinger owns shares of Wynn Resorts, Limited. 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.