Las Vegas Sands (LVS) Stock Soaring as Casino Sector Rallies

NEW YORK (TheStreet) --  Shares of Las Vegas Sands Corp. (LVS) are rising by 4.51% to $54.87 on heavy volume in mid-afternoon trading on Thursday, as some stocks within the casino sector jump today.

So far today, 8.59 million shares of Las Vegas Sands have exchanged hands as compared to its average daily volume of 5.40 million shares.

One factor driving casinos higher this afternoon is Credit Suisse's belief that the Macau gaming hub in China is starting to show some improvements, Barron's reports.

For the month of May Macau posted a 37% decline in gaming revenue. The gambling district is still struggling one year after the Chinese government's anticorruption crackdown began, which resulted in VIP players avoiding the tables.

However, Credit Suisse conducted a detailed review of Macau's May revenue data and noticed "some green shoots," Barron's added.

In May VIP gaming grew by 3% from April, VIP rolling gained by 7%, and mass gaming spiked by 9%.

"We highlighted in our earlier piece that Macau was hurt by the slower visitation in Hong Kong. We believe the impact is gradually fading. In fact, recent data shows that the Chinese visitation also improved 7.2% year-over-year during 1-24 May in Hong Kong," Credit Suisse said in an analyst note, according to Barron's.

"As the mainland Chinese visitation trend between Hong Kong and Macau has strong correlation, we believe a better trend in Hong Kong should bode well for Macau," the note continued.

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

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