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How Las Vegas Sands Corp. Has Beaten Wynn Resorts Limited

By Travis Hoium – Feb 26, 2016 at 9:30AM

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Las Vegas Sands has outperformed its nearest rival, but will those advantages last?

Image source: Las Vegas Sands.

No matter how you slice it, Las Vegas Sands (LVS -2.62%) has outperformed Wynn Resorts (WYNN -2.05%) since the recession. Sheldon Adelson's company has made more money than Steve Wynn's, it's grown faster, and it's performed better on the stock market. Understanding why can give a peek into the future of the two gaming companies.

LVS EBITDA (TTM) Chart

LVS EBITDA (TTM) data by YCharts.

Diversity and growth pays off
Las Vegas Sands has been very aggressive building out capacity in Asia, which has been its biggest growth driver. Wynn Resorts opened Wynn Macau in 2006 and the Encore expansion in 2010, but hasn't opened any new properties since then.

After having Sands Macau (2004), Venetian Macau (2007), and Four Seasons Macau (2008), Las Vegas Sands opened the massive Marina Bay Sands in Singapore in 2010 and Sands Cotai Central in 2012, bringing the company's total number of resorts in Asia to five. This capacity helped Las Vegas Sands grow quickly as Macau's gaming revenue nearly tripled between 2009 and 2014. Singapore, where Las Vegas Sands owns one of only two resorts, has even become the company's largest cash flow generator.

Wynn Resorts had less exposure to Asia, so it didn't have the same operational leverage. Recently, it was hurt even more than Las Vegas Sands by the rapid decline in Macau's VIP market. Steve Wynn has always focused on the top end of the gaming market while Las Vegas Sands is built for mass market and conventions. When the VIP market collapsed in Macau, it was Wynn Resorts that felt it a lot more than Las Vegas Sands.

Will the tables turn in 2016?
What's changing in 2016 is the construction of two new resorts, one from each company. Wynn Palace will open this summer and will double the company's presence in Asia. The Parisian, from Las Vegas Sands, is expected late in the year and will have a far less meaningful impact on the company's operations, at least on a percentage basis.

Wynn Resorts isn't ever going to build as aggressively as Las Vegas Sands might; it's just not Steve Wynn's way. But with the addition of a single resort the company could increase revenue and earnings by well over 50%. That could make it a steal compared to Las Vegas Sands for investors.

WYNN EV to EBITDA (TTM) Chart

WYNN EV to EBITDA (TTM) data by YCharts.

Will the tables turn between these two gaming giants?
Las Vegas Sands' strategy has definitely been very successful as gaming in Asia has expanded. And the drop in VIPs affected it less than others. But the tables may be turning for investors with companies like Wynn Resorts expanding from a smaller base. That could lead to better performance as Las Vegas Sands' days of massive growth move further in the rearview mirror.

Travis Hoium 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.

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Stocks Mentioned

Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
WYNN
$63.03 (-2.05%) $-1.32
Las Vegas Sands Stock Quote
Las Vegas Sands
LVS
$37.52 (-2.62%) $-1.01

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