Las Vegas Sands (LVS): Crushed analysts’ third quarter estimates

By Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 11/6/10 Sign up for free Cabot Wealth Advisory e-newsletter

Las Vegas Sands (LVS) crushed analysts’ estimates for the third quarter. The company reported earnings of 34 cents per share versus three cents a year ago, blowing away forecasts of 23 cents. And Las Vegas Sands’ revenue soared 67% to $1.91 billion, coming in above estimates of $1.8 billion.

The growth was largely fueled by solid growth at the company’s Sands’ Macau property and the first full quarter of its Marina Bay Sands Singapore operation. Staking a claim in the fast-growing emerging markets has helped Las Vegas Sands immensely.

According to Macau’s Gaming Inspection and Coordination Bureau, gambling revenue for all casinos operators there surged 40% to $1.91 billion in September alone! That’s the fourth highest number this year.

And Las Vegas Sands’ growth in its original stronghold is doing well too. The revenue from the company’s main strip of casinos in Las Vegas jumped 21% to $544.4 million in August.

This is what Editor Michael Cintolo had to say about the company recently in Cabot Market Letter:

“In Macau, [Las Vegas Sands’] cash flow surged a very healthy 40% and now accounts for fully half of the company’s total. More impressively, in Singapore, the Marina Bay Sands might be the most successful new casino of all time; revenues for the quarter totaled $486 million (this comes less than six months after opening) and cash flow was a whopping $242 million. Unbelievably, management thinks that this one property alone could produce upward of $2 billion of cash flow in 2012. Imagine!

“It’s no surprise, then, that analysts have rushed to hike their estimates going forward. The average earnings estimate for next year was $1.05 two months ago. Now it’s up to $1.62! And, clearly, if Asian economies (many gamblers in Macau and Singapore come from other countries) continue to expand, there’s no reason Sands’ casinos can’t keep performing better than investors expect. …

“ … Las Vegas Sands has been an outstanding performer, and things have gotten even better since the company reported blowout earnings last week; sales and earnings crushed expectations, and the stock has taken flight since that report. While we remain very bullish on the firm’s longer-term future, the stock is now extremely elevated above any support, and is showing signs of shorter-term exhaustion. Thus, we’re going to do some offensive selling (on the way up in price), letting go of one-third of our shares here and putting the rest on hold. We plan on giving our remaining shares plenty of room to breathe in the weeks ahead.”

Since Mike recommended LVS to Cabot Market Letter subscribers, the stock has more than doubled … and it’s up another 50% since he recommended adding more shares in September. As Mike says above, the stock is way overextended now after its huge run, so this probably isn’t the best time to start a position. But we still love the long-term story and don’t think the stock is going away any time soon.

Elyse Andrews Elyse Andrews

Editor of Cabot Wealth Advisory
Elyse Andrews edits Cabot Wealth Advisory, a free email newsletter that offers independent, no-nonsense investment advice on how to build long-lasting wealth written by Cabot’s analysts and editors. Every Saturday, Elyse writes the Weekend Digest, which includes her column and a summary of Cabot Wealth Advisories that readers may have missed during the week. Elyse is also a regular contributor to The Iconoclast Investor, a blog for Cabot editors and readers to share their views and interact with each other.