Las Vegas Sands' (LVS) Q2 Earnings: What's In The Cards?

Las Vegas Sands Corp. (NYSE:LVS) is slated to report second-quarter 2017 numbers on Jul 26, after market close.

In the last reported quarter, Las Vegas Sands came up with a 6.45% positive earnings surprise. Notably, the company’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 4.18%.

Let’s see how things are shaping up for this announcement.

Factors Likely to Affect Q2 Results

Stringent capital controls by the Chinese government and increased audits of the junket industry by Macao’s Gaming Inspection and Coordination Bureau (DICJ) in order to stop money laundering has somewhat restricted gaming revenues in Macao. Nevertheless, per the DICJ, gross gaming revenues (GGR) rose in all the three months of the quarter, thereby indicating that the casino hub is firmly on its path to recovery.

The company’s Macao operation is thus experiencing strong growth in both its mass gaming and non-gaming segments of late, given the improved operating environment there. This should propel second-quarter results.

Also, its industry-leading Cotai Strip property portfolio in Macao is witnessing strong visitation and higher hotel occupancy rates buoyed by the addition of The Parisian Macao. In fact, the resort is expected to continue attracting tourists and leisure gamblers, thereby boosting up revenues in the to-be-reported quarter.

However, the results may be somewhat hampered as concerns related to the sustainability of revenues from the VIP market linger. Also, excess supply, especially in the Macao market, is likely to reduce the company’s market share and weigh on results.

Meanwhile, the company’s focus on renovation and promotion of its Las Vegas properties are likely to result in high occupancy rates and continue driving segmental performance.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Las Vegas Sands this 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Las Vegas Sands has an Earnings ESP of -3.28%. This is because the Most Accurate estimate is 59 cents, while the Zacks Consensus Estimate is pegged higher at 61 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Las Vegas Sands carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Penn National Gaming, Inc. (NASDAQ:PENN) has an Earnings ESP of +8.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Time Warner Inc. (NYSE:TWX) has an Earnings ESP of +3.39% and a Zacks Rank #2.

Churchill Downs Incorporated (NASDAQ:CHDN) has an Earnings ESP of +3.56% and a Zacks Rank #3.

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