Factors Setting The Tone For Las Vegas Sands (LVS) Q4 Earnings

Las Vegas Sands Corp. (NYSE:LVS) is slated to release fourth-quarter 2018 financial numbers on Jan 23, after market close. In the last reported quarter, the company’s earnings have missed the Zacks Consensus Estimate by 8.3%.

Q4 Expectations

The question lingering in investors’ minds now is whether Las Vegas Sands will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 86 cents, lower than 88 cents registered in the year-ago quarter. Of late, the company’s earnings estimates have been stable. Meanwhile, the consensus mark for revenues stands at nearly $3,482 million, up 1.4% from the prior-year quarter number.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Las Vegas Sands’ top line in the quarter to be reported is likely to be driven by robust performance of Las Vegas operations and Sands Macao. However, The Venetian Macao and Sands Cotai Central segments are likely to disappoint.

For Las Vegas operations, the consensus estimate for fourth-quarter revenues is pegged at $432 million, reflecting a gain of 2.4% year over year. In order to drive its segmental performance, the company is focusing on renovation and promotion of its Las Vegas properties. Also, rise in employment rate and tourism in the region has been boosting demand at the company’s properties. Furthermore, diversification of the company’s resort portfolio and non-gaming options are expected to contribute significantly to revenues.

Moreover, the company’s Sands Macao segment, which returned to growth in the previous quarter, is likely to continue the uptrend. The Zacks Consensus Estimate for the segment is pegged at $160 million, down 3.9% year over year. However, the Zacks Consensus Estimate for The Venetian Macao and Sands Cotai Central segments are expected to decrease 0.4% and 5%, respectively.

Meanwhile, EBITDA margins have been improving consistently owing to focus on the mass and non-gaming segments that carry higher margins. Moreover, the company expects that it would continue to deliver growth in the non-gaming segment. Las Vegas Sands’ margins have expanded more than 30% since the beginning of 2012. In third-quarter 2018, the company reported hold-normalized EBITDA margin of 35%, up 150 basis points year over year.

While some companies in the leisure industry are still grappling with margin pressure, Las Vegas Sands’ performance has been impressive.

Las Vegas Sands Corp. Price and EPS Surprise

What Does the Zacks Model Says?

Our proven model does not conclusively show that Las Vegas Sands is likely to beat earnings estimates in the fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.

Las Vegas Sands has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell), which makes the surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the same sector that are poised for an earnings beat this quarter.

Wynn Resorts, Limited (NASDAQ:WYNN) has an Earnings ESP of +13.23% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

V.F. Corporation (NYSE:VFC) has an Earnings ESP of +1.71% and a Zacks Rank #3.

Zynga Inc. (NASDAQ:ZNGA) has an Earnings ESP of +29.03% and a Zacks Rank #3.

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