Las Vegas Sands Continues To Rolls Sevens

| About: Las Vegas (LVS)

Las Vegas Sands (NYSE:LVS) has been on quite a roll recently. The stock has moved from a low of $49 a share in late February to over $56 a share currently. The company released its latest earnings after the bell Monday. This should provide the fuel for the equity to take another jaunt higher based on better results than expected.

Key highlights from the latest earnings report of LVS:

  • Earnings per share came in at 71 cents, four cents above estimates.
  • Revenue of $3.3B came in $30mm over consensus as well. Sales were up 19.5% Y/Y.
  • Macau continues to drive the company as RevPAR there exceeded that of its properties in Las Vegas for the first time ever.
  • Casino revenue was up 15.5% Y/Y.
  • LVS reported 1Q13 hold-adjusted property EBITDA of $1.2bn, above the Street's estimate of $1.1bn.

4 additional reasons LVS can go up from $56 a share:

  1. Revenue growth is at a premium this quarter. So far this quarter, overall sales results for the S&P companies that have reported are down slightly from a year ago, on pace for only the second negative quarter since 2009. In contrast, LVS has seen sales growth rise at an approximate 25% CAGR over the past five years and is still growing revenues in the high teens.
  2. Consensus earnings estimates for both FY2013 and FY2014 had already ticked up over the last few months. Based on these latest results, look for more upward revisions which should buoy the stock. Credit Suisse bumped up its price target by $3 a share right after these results hit.
  3. LVS is priced at around 18x forward earnings, a large discount to its five year average (41.3). Credit Suisse estimates the company's ROIC (Return on Invested Capital) will move from ~13% in FY2012 to over 28% in FY2015.
  4. The company has an underleveraged balance sheet, yields 2.5% and could unlock significant shareholder value in the future by a sale/spin of its mall assets. It is also a great China play without having to buy a Chinese equity.

Disclosure: I am long LVS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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