Las Vegas Sands Stock Rises Amid Market Optimism

Las Vegas Sands stock has seen an 8% increase, driven by positive market sentiment from China's stimulus measures. Despite previous volatility, the company reports an increase in revenue and earnings per share, suggesting potential for further growth in the recovering Macau market.

Date: 01-10-2024

AI Rating: 6

According to a recent report, Las Vegas Sands (NYSE:LVS) has witnessed an 8% rise in stock price, significantly outperforming the S&P 500 index which only saw a 0.4% increase on the same day. This boost is largely attributed to China's announcement of a 1 trillion yuan stimulus plan aimed at revitalizing its economy. The injection of funds into state-owned banks is expected to uplift various sectors, including the gaming industry in Macau, where LVS operates.

The report highlights the recovery phase that LVS is undergoing following the drastic decline from COVID-19's impact on tourism in 2021 and 2022. Notably, visitor arrivals to Macau surged by 43.6% year-over-year in the first half of 2024, indicating a rebound, although levels are still below pre-pandemic figures.

In terms of financial performance, LVS reported revenue growth of 8.7% year-over-year, totaling $2.76 billion, although this fell short of consensus expectations by $60 million. Despite this, the company’s earnings per share increased by 20% year-over-year to $0.55, despite missing estimates slightly. The increase in earnings per share demonstrates a degree of operational efficiency and market recovery.

Another noteworthy point from the report is that LVS's EBITDA also saw a healthy increase year-over-year, from $973 million to $1.07 billion, with substantial contributions from its Marina Bay Sands property and Macau operations. However, there are risks to consider, especially concerning the macroeconomic environment that could affect future performance. The report raises a valid concern about the potential for LVS to underperform against the S&P 500 amid economic uncertainty exacerbated by factors like rate cuts and geopolitical tensions.

The evaluation of LVS over a three-year period demonstrates significant volatility, with returns showing a pattern of substantial fluctuation. This history could instill caution among investors, particularly given the stock has underperformed compared to more stable portfolios like the Trefis High Quality Portfolio, which outperformed the S&P 500 each year.

Stocks: LVS WYNN