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Las Vegas Sands Corp LVS

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Morningstar’s Analysis

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Economic Moat




Las Vegas Sands Posts Tepid Q2 Results, but Solid Liquidity Should Help it Weather Coronavirus Storm

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Las Vegas Sands’ second-quarter earnings reflected the difficulties the gaming industry faces with travel and group sizes still restricted in many locations, even as its markets enter early stages of recovery. While it continues to invest in Macau (59% of 2019 EBITDA) and Singapore (31% of 2019 EBITDA), which bolsters the regulatory intangible advantage that drives Sands’ narrow moat given meaningful barriers to entry with limited licenses available, the closures of some locations and the limitations surrounding non-gambling related revenue sources lead to a below-expectations second quarter. Revenue amounted to just $98 million, down 97% year over year, and it posted an operating loss of $922 million--lagging CapIQ’s consensus mean projection of about $550 million and a $610 million loss, respectively. We may edge down our $62 fair value estimate modestly, but still view shares as undervalued.

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Company Profile

Business Description

Las Vegas Sands is the world's largest operator of fully integrated resorts, featuring casino, hotel, entertainment, food and beverage, retail, and convention center operations. The company owns the Venetian Macao, Sands Macao, Sands Cotai Central Londoner, Four Seasons Hotel Macao, and Parisian in Macao, the Marina Bay Sands resort in Singapore, and the Venetian and Palazzo Las Vegas in the U.S. We expect Sands to open a fourth tower in Singapore in mid-2023. The company generates about 90% of its EBITDA from Asia, and its casino operations generate around 70% of sales.

3355 Las Vegas Boulevard South
Las Vegas, NV, 89109
T +1 702 414-1000
Sector Consumer Cyclical
Industry Resorts & Casinos
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 50,000