NEW YORK (TheStreet) --Shares of Las Vegas Sands Corp. (LVS) are down by 1.63% to $50 in late afternoon trading on Monday, as some casino operator stocks are driven lower by the decline in revenue out of China's Macau gaming region.
In May Macau's revenue dropped by 37%, in line with what analysts were expecting. However, this marked a full year of consecutive monthly declines out of the only area in China where gambling is legal.
Revenue in Macau began to slump when the Chinese government started to crackdown on corruption out of the district. High stakes and VIP players started avoiding the tables in Macau when the government initiative commenced.
Macau's gambling revenue fell to 20.3 billion pactacs ($2.5 billion) from 32.4 billion patacas from the same month in the previous year, Reuters reports.
Another headwind for Macau includes a smoking ban in the casinos.
There are over 300 million smokers in China and over a million people in the country die from smoking related illnesses each year, BBC.com reports.
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 some important positives, 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 notable return on equity and expanding profit margins. 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:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength 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.
- 47.43% 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 16.99% is above that of the industry average.
- LVS, with its decline in revenue, underperformed when compared the industry average of 7.3%. Since the same quarter one year prior, revenues fell by 24.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- LAS VEGAS SANDS CORP's earnings per share declined by 32.6% 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 23.0% in earnings ($2.70 versus $3.51).
- The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, LVS has managed to keep a strong quick ratio of 1.57, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: LVS Ratings Report