NEW YORK (TheStreet) -- Shares of Las Vegas Sands (LVS) - Get Report are down by 3.73% to $38.76 in mid-afternoon trading on Tuesday, as stocks within the casino sector decline on concerns regarding revenue out of China's Macau gambling hub.
Macau related stocks are tumbling as one of the gambling district's biggest junkets, Neptune Group, said it may lower operations in Macau if VIP gamers continue to avoid the region, Reuters reports.
Las Vegas Sands is a Las Vegas-based resort and casino company with operations all over the world, including Macau.
VIP gamers began avoiding the Macau gaming tables last year, when China's government began an anticorruption crackdown in the only region in China where gambling is legal.
Junkets such as Neptune facilitate loans to VIP gamers, Reuters said. Until last year, VIP gamblers accounted for 70% of Macau's monthly gaming revenues.
On Friday, the junkets said annual earnings had declined to a five year low.
"While we do not believe Neptune is leaving the Macau scene we do believe that more junket closures are likely and that liquidity could increasingly become a concern that could drive further downside to the VIP story," Union Gaming Securities analyst Grant Govertsen told Reuters.
Separately, TheStreet Ratings team rates LAS VEGAS SANDS CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate LAS VEGAS SANDS CORP (LVS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 46.52% is the gross profit margin for LAS VEGAS SANDS CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.05% is above that of the industry average.
- LVS, with its decline in revenue, underperformed when compared the industry average of 3.8%. Since the same quarter one year prior, revenues fell by 19.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, LAS VEGAS SANDS CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- LAS VEGAS SANDS CORP's earnings per share declined by 28.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LAS VEGAS SANDS CORP increased its bottom line by earning $3.51 versus $2.79 in the prior year. For the next year, the market is expecting a contraction of 26.5% in earnings ($2.58 versus $3.51).
- You can view the full analysis from the report here: LVS