By Todd M.
Las Vegas Sands (LVS) is set to report fourth quarter 2012 earnings on Wednesday, January 30. Results are typically announced a few minutes after the closing bell, followed by a conference call at approximately 4:30 p.m. Eastern Time. Las Vegas Sands operates casino and hotel properties in the United States, Singapore, and Macau, China.
Outliers & Strategy
- Adjusted Earnings Per Share: The EPS consensus estimate is $0.59, with a wide range of $0.52 - $0.70. (Source: Yahoo! Finance)
- Revenues: The consensus revenue estimate is $3.01bln with a range of $2.83bln - $3.17bln.
- Adjusted Property EBITDA is an important figure to watch closely that helps investors more accurately compare firms within the industry. Last quarter Las Vegas Sands reported Adjusted Property EBITDA of $876mln.
- Sympathy Plays: could be seen in other names such as Wynn Resorts (WYNN), Market Vector's Gaming ETF (BJK), MGM Grand Resorts International (MGM), Ceasars Entertainment Corp. (CZR), and Melco Crown Ent. (MPEL)
- Implied Volatility: Using the February 1 weekly options with $53 strike, traders are expecting a move of plus or minus approximately $2.86 (+-5.40%) after earnings are disseminated.
- 01/28: According to a post on Barrons.com, Las Vegas Sands has been given approval by Macau authorities to open 200 more gaming tables. Though this was expected, it bolsters sentiment of the relationship the company has with the Chinese government.
- 01/23: Compass Point has upgraded LVS from Sell to Neutral, according to a post on StreetInsider.com. The upgrade was prompted by a re-acceleration of growth in Macau casino revenues. Compass Point also raised its price target from $37 to $44.
- 01/18: Wells Fargo upgraded LVS from Market Perform to Outperform, according to a post on Dividend.com, increasing the price target range from $42 - $49 to $60 - $70. The firm cites a bullish view on Macau in 2013, among other things.
- 01/22: According to a post on InnovateGaming.com, analysts at HSBC, Citi and Goldman Sachs have all raised their Macau Casino Revenues to +13.5%, +10% and +16% respectively.
- 12/10: According to a post on TheStreet.com, there has been continued speculation that Las Vegas Sands could spin-off its assets and register as a real-estate investment trust (REIT).
Las Vegas Sands shares have had an impressive quarter, climbing 25% to $52.63. Over recent weeks, the stock has traded in a tight range between $52 and $54, indicating that a large break either way could come soon. Shares have been trading on large volume on up days, and light volume on down days - a highly bullish signal. If earnings surprise to the upside, shares could approach the 52-week high of $59.34 set on April 12, 2012. Conversely, if earnings disappoint, look for support at $51.50, followed by $48 (the top of late December's gap and the 50-day SMA). (Chart courtesy of StockCharts.com)
Las Vegas Sands shares are up 14.91% YTD, basing at the $52 area. Fueling the recent rally is optimism over the global economy, solid casino data from China, and speculation that Las Vegas Sands may convert to a REIT. Given the recent run up in the stock, coupled with exuberant sell-side sentiment, a solid report may be priced in at these levels. Against this backdrop, shares could be vulnerable to any negatives in the upcoming release.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.