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Why Las Vegas Sands Corp.'s Shares Plunged 11% Today

By Travis Hoium - Apr 21, 2016 at 1:48PM

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Earnings were down at Las Vegas Sands Corp., but is this sell-off deserved?

Image source: Las Vegas Sands.

What: Shares of Las Vegas Sands Corp. (LVS 1.32%) dropped 11% in trading Thursday after the company reported first-quarter results.

So what: Revenue fell 9.8% from a year ago to $2.72 billion and net income plunged 37.5% to $320.2 million, or $0.40 per share. Revenue missed the $2.88 billion analysts expected and adjusted earnings of $0.45 per share fell short of the $0.61 estimate .

Results were affected heavily by bad luck, particularly in Singapore. So, the better measure of earnings may be the hold-normalized adjusted diluted EPS number, which was $0.57.   

Now what: On the surface, the numbers don't look good, but Las Vegas Sands actually performed well in the quarter. The company took market share, particularly on the important Cotai Strip, and Marina Bay Sands only saw a single-digit dip in gaming volume, despite a 28% slide in gaming revenue because of bad luck.

As the largest gaming company in the world, I think this is a blip on the radar for Las Vegas Sands. It has a solid balance sheet and a tremendous amount of cash flow generation. The stock also yields 6.2% right now, so it'll be a cash flow machine for investors. I think the market has overreacted tremendously today and conditions are far better than the market thinks at Las Vegas Sands.

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