Las Vegas Sands Inc. (NYSE: LVS) reports earnings after the market closes on Thursday, Nov. 3, and there's a lot to look at in the results. As usual, Macau will dominate discussion, but there will be important information coming from Las Vegas and Singapore, as well. Here are three things to look for.
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What is the state of Macau?
On Sept. 13, Las Vegas Sands opened The Parisian in Macau, shortly after Wynn Resorts, Limited (NASDAQ: WYNN) opened Wynn Palace. The two resorts have been followed by the first two months of growth in Macau since 2014. But they're also diluting the market. How will those two factors play against one another?
Overall, Macau's gaming revenue grew 1.2% in the third quarter, and that's the bar for comparing each resort's performance. The Venetian Macau, Four Seasons Macau, and Sands Cotai Central will likely see a decline in revenue, but if The Parisian is only a small impact, it would be good for the company's market share.
More customers may also be pulled away from Sands Macau on the Macau Peninsula. The Cotai Strip is essentially complete, and that's drawing customers away from the Macau Peninsula. Investors, however, will want to watch how the trends moved in the quarter.
As new resorts open, they'll cannibalize existing resorts unless Macau grows more than it is today. Who is beginning to lose business and who isn't will be a big key to third-quarter results.
Is Singapore growing or shrinking?
Marina Bay Sands often gets overlooked when earnings are released, but it's actually Las Vegas Sands' most important property financially. But Marina Bay Sands has been impacted by the decline in gambling in Asia, in general, primarily because of a corruption crackdown in China.
In the second quarter, rolling chip volume -- a measure of VIP play -- fell 29.1%, and non-rolling chip drop fell 10.7%. If volume continues dropping, it'll be an incremental negative for the company and a sign that Macau's troubles are spreading across Asia.
Is Las Vegas still a point of strength?
The one consistent bright spot in Las Vegas Sands' portfolio has been Las Vegas itself. The Las Vegas properties are steadily growing, and room rates are slowly rising as the economy improves more broadly.
Investors will want to look at whether gaming revenue is growing at the resort, and more importantly, whether or not non-gaming results are growing. Unlike Macau, gaming isn't the big business in Las Vegas, so the non-gaming activity is more important to Las Vegas Sands than the casino floor.
No growth might be good enough
In the upheaval of Macau's gaming market and new properties opening there, investors haven't set very high expectations. Earnings estimates are $0.60 per share versus the $0.66 reported a year ago, although revenue is expected to grow sequentially, from $2.65 billion to $2.80 billion.
At the end of the day, investors will want to watch the trends in gaming more than the headline results. If customers are moving toward Cotai in Macau, Singapore can turn around its decline, and if Las Vegas remains steady, Las Vegas Sands will be in a position to profit long term. Add to that a 5% dividend yield, and investors can just collect cash from the money everyone else is gambling around the world.
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