The world’s leading developer and operator of convention-based integrated resorts Las Vegas Sands Corp. (ME AGAINST) invested $ 157 million in investment programs in the second quarter (ending June 30, 2021) to expand and improve its integrated resort offering in Macau and Singapore. Net revenue for the quarter rose 1,791.9% year over year to $ 1.17 billion, but net loss was $ 242 million from $ 985 million a year ago.
The stock lost 14.8% last month and 42.2% over the past six months, closing yesterday’s trading session at $ 36.75. Additionally, it is currently trading 45% below its 52-week high of $ 66.77, which it hit on March 3, 2021. LVS is also currently trading below its 50-day and 200-day moving averages of $ 39.87 and $ 50.48, respectively. indicates that it is in a downtrend. Plus, it could continue to lose in the coming months due to travel restrictions and reduced visitor numbers in several parts of the world such as Macau. So the short-term prospects for LVS look bleak.
The following could shape LVS performance in the coming months:
Increased casino regulations
Last month, US casino firms exposed to Macau, such as LVS, broke after officials at the Asian gambling center announced they would Stricter restrictions for operators. Brian Egger, gambling industry analyst at Bloomberg Intelligence, said on Sept. 16, “The Wynn and Sands sell-off may be warranted by a possible worst-case outcome of the gambling law review. Dividend restrictions and non-gambling investment requirements could weaken casino junkets, while renewed licenses – with foreign ownership under scrutiny – could be shorter than the initial 20-year terms.
Bad profitability
In terms of the past 12 months EBITDA margin, 2.02% of LVS is 84.2% lower than the industry average of 12.81%. Likewise, the asset turnover rate of 0.21% in the last 12 months is 79.7% below the industry average of 1.05%. Additionally, the stock’s trailing 12-month ROCE, ROTC, and ROTA are negative compared to industry averages of 17.76%, 7.56% and 6.28%, respectively.
Stretched rating
In terms of Forward EV / S, the LVS is 7.66x 435.7% above the industry average of 1.43x. Likewise, its Forward P / CF of 65.95x is 419% higher than the industry average of 12.71x. In addition, the share’s Forward P / S and EV / EBITDA of 5.19x and 32.23x are above the industry averages of 1.18x and 9.90x, respectively.
POWR ratings reflect grim prospects
LVS has an overall rating of D, which equates to selling in ours POWR ratings System. The POWR ratings are calculated taking 118 different factors into account, with each factor being optimally weighted.
Our proprietary rating system also rates each stock based on eight different categories. LVS has the grade D for sentiment. This is justified as analysts expect EPS to remain negative in fiscal 2021.
LVS has a D rating for Value, consistent with its above-industry rating metrics. Additionally, the stock has a D rating for stability, which is in line with its beta of 1.48.
We also rated LVS for growth, momentum and quality in addition to the POWR rating reviews I just highlighted. Click here to get all LVS ratings.
In addition, LVS ranks 27th out of 31 stocks in the Entertainment – Casinos / Gambling Industry.
Bottom line
LVS’s near-term outlook looks bleak as pandemic-induced travel restrictions in both Macau and Singapore continue to limit visits and hinder their financial performance. In addition, EPS is expected to remain negative in fiscal 2021. The stock therefore appears overvalued at the current price level and should best be avoided now.
How does Las Vegas Sands (LVS) compare to its competitors?
While LVS has an overall POWR rating of D, you should consider investing in the following entertainment casino / gambling stocks that have an A rating (strong buy): Boyd Gaming Corporation (WORLD), Golden Entertainment, Inc. (GDEN) and Century Casinos, Inc. (CNTY).
The LVS share was unchanged in after-hours trading on Thursday. Since the beginning of the year, the LVS has fallen by -37.72%, compared to an increase of 18.47% in the reference index S&P 500 in the same period.
About the author: Nimesh Jaiswal
Nimesh Jaiswals His passionate interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of annual financial statements for the development of the share price is the most important approach he takes when advising investors in his articles. More…
