Shares of Las Vegas Sands Corp. LVS have risen 31.9% in the past three months compared with the industry’s 15.8% growth. The company is benefiting from a strong recovery in Macau, strategic investments in Singapore and robust capital return initiatives. However, uncertainties in China remain a concern.
Let’s delve deeper.
Factors Likely to Drive Growth
The Macao market continues to grow. During the third quarter of 2024, total gaming revenues in the market increased 13% year over year to about $6.9 billion. Mass gaming revenues also rose 14% to approximately $6.1 billion. The outlook for Macao remains positive. Gross gaming revenues are anticipated to surpass $30 billion in 2025 and continue growing annually thereafter. The introduction of 1,500 new suites and 905 rooms by Golden Week 2025 is expected to enhance visitation, margins and EBITDA. As the Macau market expands beyond premium customers, LVS’ diversified offerings provide a competitive edge.
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Las Vegas Sands is confident about its growth opportunity in Singapore. In the third quarter of 2024, Marina Bay Sands generated $406 million in EBITDA, with potential for higher earnings as rolling play normalizes. The ongoing $1.75-billion refurbishment program and the Marina Bay Sands IR2 project are likely to enhance MBS’ appeal as a premier destination for high-value leisure and business tourism. With a robust event calendar and the addition of new gaming and integrated resort amenities by mid-2025, Singapore's contribution to LVS’ overall performance is poised to grow further.
LVS’ strategy revolves around investing in scalable, high-quality assets that deliver superior returns on capital. With a strong presence in gaming and non-gaming segments, the company is positioned to capture a growing share of high-value tourism and leisure spending. The reopening of key facilities and ongoing investments in infrastructure ensure a solid foundation for long-term growth.
Las Vegas Sands is dedicated to rewarding its shareholders through significant capital returns. In the third quarter of 2024, the company repurchased shares worth $450 million and increased its buyback authorization to $2 billion. Additionally, LVS announced an increase in its annual dividend to $1 per share for 2025, signaling confidence in its growth trajectory and commitment to shareholder value.
Concerns
Las Vegas Sands derives a substantial portion of its revenues from Macau, which remains vulnerable to external risks. Despite the reopening momentum, Macau’s gaming revenue recovery is uneven. Premium mass visitation has improved, but base mass gaming remains subdued. Economic uncertainties in China and fluctuating consumer sentiment could delay a full-scale recovery, affecting LVS' ability to sustain its momentum.
The rapid rise of online gambling presents a threat to traditional, capital-intensive casino operations. Markets like New Jersey and Pennsylvania have demonstrated that online revenues can rival or even surpass land-based gaming revenues. As more states consider legalizing online gambling, LVS’ reliance on large-scale physical properties may place it at a competitive disadvantage. This structural shift in the gaming landscape warrants caution for investors seeking growth.
Conclusion
LVS is well-positioned for continued growth, driven by strong recovery in Macau, promising developments in Singapore, and a commitment to shareholder value through capital returns. While uncertainties in China pose concerns, the company’s diversified offerings, strategic investments in premium assets and solid market positioning provide a strong foundation for future growth.
Given these factors, retaining LVS stock remains a prudent choice for investors seeking exposure to the gaming and hospitality industry. The company’s Zacks Rank #3 (Hold) justifies our thesis.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector have been discussed below.
Carnival Corporation & plc CCL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
CCL has a trailing four-quarter earnings surprise of 318.1%, on average. The stock has surged 75.2% in the past year. The Zacks Consensus Estimate for CCL’s fiscal 2024 sales indicates growth of 16.7% from the year-ago levels.
Norwegian Cruise Line Holdings Ltd. NCLH currently sports a Zacks Rank #1. NCLH has a trailing four-quarter earnings surprise of 4.2%, on average. The stock has surged 85.9% in the past year.
The Zacks Consensus Estimate for NCLH’s 2024 sales and earnings per share (EPS) indicates growth of 10.5% and 134.3%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. RCL currently carries a Zacks Rank #2 (Buy). RCL has a trailing four-quarter earnings surprise of 16.2%, on average. The stock has surged 126.3% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates growth of 18.6% and 71.8%, respectively, from the year-ago levels.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
