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  • The correction in the Nasdaq over the last 4 weeks has not spared Las Vegas Sands.
  • Q1 numbers from Macau are strong.
  • Key growth drivers remain attractive features of the stock.

The recent Nasdaq sell-off has many high-flying performers of 2013 posting double digit losses over only a handful of days. After posting a high at $88/share, on eerily positive statements from Chinese Premier Li on China GDP, Las Vegas Sands (NYSE:LVS) has not been spared, sitting at $77/share, up 2%, April 9, 2014. Does the recent selling panic around LVS offer an opportune time to buy for the long-term investor?

Feria promotes a simple strategy of finding companies that offer both strong revenue growth as well as solid dividend value, paying you the stockholder to hold its shares. In our last article, we identified strong evidence that Las Vegas Sands will continue to grow while offering a decent dividend value play. Today we will revisit the evidence to see how one side of affairs appears to be weakening, while the other offers an even more compelling entry point.

When Premier Li announced a target rate of 7.5% GDP for China, in line with what many economists are expecting for the country, Las Vegas Sands hit its recent high. On what was widely considered good news, that the Chinese economy should not be slowing greatly from last year's growth, LVS has continued to sell off almost 17%. But the weight of the evidence shows the company's fundamentals portend continued growth and value.

First, CEO Sheldon Adelson is as committed to returning equity to shareholders as David Ortiz is committed to Samsung's marketing plan. Spearheading both a buyback program and the raising of LVS's dividend to $0.50/share, Adelson has presided over a uniquely comfortable situation for any Chief Executive: when you are making money hand over fist, few strategies are more popular with shareholders than reducing the availability of shares and paying higher dividends. Adelson, of the "Obama-will-raise-taxes-let's-do-a-special-dividend" fame, holds millions of shares himself, so you can understand the sentiment.

Secondly, that increased dividend, coupled with the recent sell-off, now props the yield up to 2.66%. We have been proponents since the dividend was as low as 2.00% in October 2013, so suffice to say this sizeable increase in the last 6 months has been welcome. Compared with the savings accounts where patrons regular collect less than 1%, this yield has favorable comparisons. Even competitor Wynn (NASDAQ:WYNN) has a noticeably skinnier dividend, clocking in at 2.37%. As you will see, this is not the only advantage it has against its formidable foe.

Third, the buyback continues. Las Vegas Sands is purchasing roughly $75 million a month in stock, reducing the company's float. This is expected to help catalyze the earnings per share (NYSEARCA:EPS) as the buyback continues to unfold. Again, management is unlocking shareholder returns by shoring up the outstanding shares. This strategy characterizes the management's commitment to shareholders. Remember, CEO Adelson owns a pretty hefty portion of shares himself, so returning capital is part of the modus operandi for LVS.

Las Vegas Sands also sports a more economical 17 forward P/E compared to Wynn's 22. This in light of the strongest near-term revenue catalyst for LVS, the continued construction and forthcoming opening of the Parisian Macau, which will be open a year before the new resort entries from Wynn and MGM. As the infrastructure is built out in the area, and Macau becomes even more friendly to tourism, all the casino operators should benefit. The short-term risks involved with a slowing Chinese economy have tended to coincide with sell-offs, so the stock's exposure to the economic climate in China is real. April weather in Macau has even had an effect on the sector, but the long-term trajectory of LVS in Macau cannot be understated. Forbes has highlighted the strong Q1 numbers from the Chinese peninsula, indicating that growth continues to be robust. The question becomes whether the expected growth has already been priced into the stock. As the lower P/E evidences, however, we believe it is the cheaper of the best options, in light of the fundamentals and situation of LVS today discussed above.

Source: Las Vegas Sands Revisited: The Sell Off Opportunity