NEW YORK (TheStreet) -- Shares of Las Vegas Sands (LVS) are down by 4% to $52.80 in mid-morning trading on Monday, following an analyst note from Stern Agee stating it believes the gaming hub in China's Macau district is "off to a slow start" in June.
Las Vegas Sands is a Las Vegas, NV.-based casino operator with facilities in the U.S. and Asia.
The Macau district, the only region in China where gambling is legal, has been suffering a year of declining revenue since the government began an anti-corruption crackdown on the area. The government initiative has kept high stakes and VIP players away from the tables.
"According to our channel checks, Macau table-only gross gaming revenue ("GGR") is MOP3.3 billion ($410 million) from June 1 to June 7," Sterne Agee said. MOP represents the currency in Macau.
The firm's June GGR growth results indicate a -46% year-over-year monthly result or MOP14.6 billion ($1.8 billion).
"Given abnormal market share and other checks, we believe hold negatively impacted early June results. Still, results are disappointing especially given a two week proximity to the opening of Galaxy's Phase 2," Sterne Agee continued.
Sterne Agee believes the Macau market will continue to generate sequentially "less bad" results from a growth bottom in February. However, the firm is expecting near-term second quarter 2015 consensus estimate downward revisions.
The firm cited sources that state it is likely more VIP rooms will be downsized or closed in the near to intermediate future on demand issues.
Other casino stocks with operations in Macau that are slipping today include Galaxy Entertainment Group (GXYEY), falling by 1.87% to $44.95, Melco Crown Entertainment (MPEL), down by 3.75% to $20.16, and MGM Resorts International (MGM), lower by 4.83% to $19.30 this morning.
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 several positive factors, 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 7.5%. 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