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Will Las Vegas Sands Miss Earnings Again on Macau Slump?

Zacks Equity Research

Las Vegas Sands Corp. (LVS) is set to report third-quarter 2014 results on Oct 15, after the market closes. Last quarter, the company posted a negative earnings surprise of 4.49% owing to weak Macau results. Let us see what is in store for the stock in this quarter.

Factors to Consider

Las Vegas Sands is one of the leading companies in the gaming and lodging industry and earns a better part of its revenues from Macau, China. However, China's crackdown on illegal money transfers, credit growth concerns, tighter restrictions on visas, smoking ban in casinos and the current protests in Hong Kong are posing considerable threats to Macau’s gaming revenues, which have raised concerns for the company.

Las Vegas Sands missed the Zacks Consensus Estimate in the second-quarter 2014 on both earnings and revenues owing to the prevailing weakness in the Macau market. In addition, gross gaming revenues in the region declined in all three months of the quarter, due to the anti-graft corruption drive taken by the Chinese government. Given the current scenario, we believe that it would be difficult for the company to surpass expectations for the quarter.

Over the last 30 days, estimates have largely declined for the upcoming quarter as well as for 2014.

Earnings Whispers?

Our proven model does not conclusively show that Las Vegas Sands is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The company’s Earnings ESP stands at -3.57%. This is because the Most Accurate estimate is pegged at 81 cents while the Zacks Consensus Estimate stands at 84 cents.

Zacks Rank: Las Vegas Sands has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some other companies in the consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Pinnacle Entertainment Inc. (PNK) with an Earnings ESP of +20.93% and a Zacks Rank #3 (Hold).

Malibu Boats, Inc. (MBUU) with an Earnings ESP of +5.00% and a Zacks Rank #1 (Strong Buy).

The Walt Disney Company (DIS) with an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy).

Read the Full Research Report on LVS
Read the Full Research Report on DIS
Read the Full Research Report on PNK
Read the Full Research Report on MBUU


Zacks Investment Research