Las Vegas Sands Corp. (LVS) develops, owns, and operates integrated resorts in Asia and the United States. The company owns and operates The Venetian Macao Resort Hotel, Sands Cotai Central, the Four Seasons Hotel Macao, the Plaza Casino, and the Sands Macao in Macau, the People’s Republic of China. It also owns and operates the Marina Bay Sands in Singapore; The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and Five-Diamond luxury resorts on the Las Vegas Strip; the Sands Expo and Convention Center in Las Vegas, Nevada; and the Sands Casino Resort Bethlehem in Bethlehem, Pennsylvania. The company’s integrated resorts comprise accommodations, gaming, entertainment and retail facilities, convention and exhibition facilities, celebrity chef restaurants, and other amenities. Las Vegas Sands Corp. was founded in 1988 and is based in Las Vegas, Nevada. (Daily Chart) (Weekly Chart)
| Price $62.83 1yr Target $73.65 Analysts 20 1yr Cap Gain 17.22% Dividend $2.00 Yield 3.18% 1yr Est Tot Return 20.40% | Market Cap $50.39 Bil Beta 1.68 EPS (ttm) $3.32 Payout Ratio 60.24% EPS next yr $3.79 P/E 18.92 PEG 1.40 Forward P/E 16.56 | Debt/Equity 1.43 ROA 12.00% ROE 36.20% ROI 18.40% Sales $14.82 Bil Income $2.70 Bil Profit Margin 18.21% |
Background
Sheldon Adelson, Richard Katzeff, Irwin Chafetz, Ted Cutler, and Jordan Shapiro founded the company and bought the famous Sands Hotel in Las Vegas in 1989. One year later, in 1990, they opened the Sands Expo and Convention Center directly across from the hotel. The Convention Center is a 1.2-million-square-foot facility and is currently the largest privately owned convention facility in the world.
In 1996, the Sands Hotel was imploded it to make room for The Venetian Hotel. Construction of the Venetian began in 1997. Modeled on Venice, Italy, it joined Excalibur, New York-New York, Paris Las Vegas and other themed hotels on the Las Vegas Strip.
As the trend in Las Vegas shifted to a more "elegant" type of hotels on the strip, construction of The Palazzo began in 2005. Together, the Palazzo, Venetian and Sands Expo make up the world’s largest integrated resort, with 7,100 all-suite rooms, 2.3 million square feet of convention and exhibition space, and an array of shopping, dining and entertainment options.
In 2004, the Venetian Hotel’s parent company went public and Las Vegas Sands Inc. became Las Vegas Sands Corp. This new company focused their hotels on courting the convention and trade show industry rather than simply gambling. Traditional Las Vegas based companies were based on keeping hotel rooms to a minimum so as to encourage guests to spend as much time as possible in the casino. LVS designed their hotel rooms as luxury suites adding in mini-bars and big screen televisions creating comfortable work spaces in every room. By doing all this, he counted on business from the Sands Expo and Convention Center to keep mid-week occupancy strong. This proved correct and the company now makes more money in Las Vegas from conventions than gambling.
LVS was also among the first to foresee the financial potential of Asia. LVS was the first to move to locate part of the company closer to the Asian market. The decision was to construct properties in Macau, the former Portuguese colony turned over to China in late 1999, because it's the only place on mainland China where casino gambling is legal. Las Vegas Sands opened it's first property, the Sands Macao, in 2004. LVS realized that the company's future was in establishing an entire strip of properties similar to the Las Vegas Boulevard featuring many hotels of various styles and price ranges. But Macau's total area consists of the one small peninsula and two islands and is less than 12 square miles.
So LVS created the land by filling the bay between the Coloane and Taipa islands and calling the area the Cotai Strip. He then began construction of the largest inhabited building in the world - the Venetian Macao. The hotel was completed and officially opened on August 28.
The resort is twice the size of its Las Vegas counterpart. It will seat 15,000 people and is one of the largest exhibition centers in Asia. The resort receives between 70,000 and 100,000 visitors each day and has a staff of approximately 12,000 on site. The 550,000-square-foot casino is also the largest in the world.
In 2008, Las Vegas Sands opened a Four Seasons hotel next to the Venetian Macao, as well as Paiza Mansions, which are “for invited guests only.” The company is also building resorts in Macau for a number of brands---The Holiday Inn, Intercontinental, and Sheraton Hotels---when they open on the Sands Cotai Central in the first quarter of 2012.
Despite its successes, Las Vegas Sands hit hard times in 2008 during the world's financial crises. At one a point the company was losing $1,000 per second and the stock price ended up falling 97 percent within a 52-week period.
LVS opened a $5.6 billion resort, the Marina Bay Sands, in Singapore in April, 2010. The resort quickly posted a $600 million operating profit in just the first eight months of business, a record in the industry. The Marina Bay Sands has three 55-story sloping towers with approximately 2,600 rooms and suites. A year after Marina Bay Sands opened, tourism to Singapore shot up 20% and the economy expanded by 15%.
Las Vegas Sands continues to look for new expansion opportunities in area like Japan, Korea, Vietnam, Taiwan and Thailand. In the US, the company continues to expand its 2009 resort in Bethlehem, Pennsylvania, which opened in 2009 to compete with Atlantic City for some of the New York market. Las Vegas Sands has also talked about the possibility of a Florida resort.
Sheldon Adelson, Richard Katzeff, Irwin Chafetz, Ted Cutler, and Jordan Shapiro founded the company and bought the famous Sands Hotel in Las Vegas in 1989. One year later, in 1990, they opened the Sands Expo and Convention Center directly across from the hotel. The Convention Center is a 1.2-million-square-foot facility and is currently the largest privately owned convention facility in the world.
In 1996, the Sands Hotel was imploded it to make room for The Venetian Hotel. Construction of the Venetian began in 1997. Modeled on Venice, Italy, it joined Excalibur, New York-New York, Paris Las Vegas and other themed hotels on the Las Vegas Strip.
As the trend in Las Vegas shifted to a more "elegant" type of hotels on the strip, construction of The Palazzo began in 2005. Together, the Palazzo, Venetian and Sands Expo make up the world’s largest integrated resort, with 7,100 all-suite rooms, 2.3 million square feet of convention and exhibition space, and an array of shopping, dining and entertainment options.
In 2004, the Venetian Hotel’s parent company went public and Las Vegas Sands Inc. became Las Vegas Sands Corp. This new company focused their hotels on courting the convention and trade show industry rather than simply gambling. Traditional Las Vegas based companies were based on keeping hotel rooms to a minimum so as to encourage guests to spend as much time as possible in the casino. LVS designed their hotel rooms as luxury suites adding in mini-bars and big screen televisions creating comfortable work spaces in every room. By doing all this, he counted on business from the Sands Expo and Convention Center to keep mid-week occupancy strong. This proved correct and the company now makes more money in Las Vegas from conventions than gambling.
LVS was also among the first to foresee the financial potential of Asia. LVS was the first to move to locate part of the company closer to the Asian market. The decision was to construct properties in Macau, the former Portuguese colony turned over to China in late 1999, because it's the only place on mainland China where casino gambling is legal. Las Vegas Sands opened it's first property, the Sands Macao, in 2004. LVS realized that the company's future was in establishing an entire strip of properties similar to the Las Vegas Boulevard featuring many hotels of various styles and price ranges. But Macau's total area consists of the one small peninsula and two islands and is less than 12 square miles.
So LVS created the land by filling the bay between the Coloane and Taipa islands and calling the area the Cotai Strip. He then began construction of the largest inhabited building in the world - the Venetian Macao. The hotel was completed and officially opened on August 28.
The resort is twice the size of its Las Vegas counterpart. It will seat 15,000 people and is one of the largest exhibition centers in Asia. The resort receives between 70,000 and 100,000 visitors each day and has a staff of approximately 12,000 on site. The 550,000-square-foot casino is also the largest in the world.
In 2008, Las Vegas Sands opened a Four Seasons hotel next to the Venetian Macao, as well as Paiza Mansions, which are “for invited guests only.” The company is also building resorts in Macau for a number of brands---The Holiday Inn, Intercontinental, and Sheraton Hotels---when they open on the Sands Cotai Central in the first quarter of 2012.
Despite its successes, Las Vegas Sands hit hard times in 2008 during the world's financial crises. At one a point the company was losing $1,000 per second and the stock price ended up falling 97 percent within a 52-week period.
LVS opened a $5.6 billion resort, the Marina Bay Sands, in Singapore in April, 2010. The resort quickly posted a $600 million operating profit in just the first eight months of business, a record in the industry. The Marina Bay Sands has three 55-story sloping towers with approximately 2,600 rooms and suites. A year after Marina Bay Sands opened, tourism to Singapore shot up 20% and the economy expanded by 15%.
Las Vegas Sands continues to look for new expansion opportunities in area like Japan, Korea, Vietnam, Taiwan and Thailand. In the US, the company continues to expand its 2009 resort in Bethlehem, Pennsylvania, which opened in 2009 to compete with Atlantic City for some of the New York market. Las Vegas Sands has also talked about the possibility of a Florida resort.
The Fundamental
Revenues have increased for the Las Vegas Sands Corp at a very robust pace during the last 8 years as can be seen in the chart below. This is best illustrated by viewing the revenue growth rates. Revenue growth rates above 20% per year and at times approaching 30% per year are very rare in any industry and something that any investor will notice quickly. Looking at the revenue growth estimates going forward, those rates won't continue at those rates but they are expected to continue to increase.
Earnings were on track until the world's recession occurred in 2008/2009. As discussed above, that period was extremely difficult for LVS and the entire market. Fortunately LVS was able to continue to increase revenues despite the hit it took to its earnings. In 2010, as the overall economy began to recover, earnings once again expanded. These earnings are continuing to increase today and estimates have earnings continuing upward through 2015.
Dividends, which began in 2012, have continued for the last three years. Estimates for future dividend growth, however, show a slowing of the dividend rate going forward which would be more in line with growth rates estimated for revenues and earnings.
Earnings were on track until the world's recession occurred in 2008/2009. As discussed above, that period was extremely difficult for LVS and the entire market. Fortunately LVS was able to continue to increase revenues despite the hit it took to its earnings. In 2010, as the overall economy began to recover, earnings once again expanded. These earnings are continuing to increase today and estimates have earnings continuing upward through 2015.
Dividends, which began in 2012, have continued for the last three years. Estimates for future dividend growth, however, show a slowing of the dividend rate going forward which would be more in line with growth rates estimated for revenues and earnings.
| Year 2015 Est 2014 Est 2013 2012 2011 2010 2009 2008 2007 2006 2005 | Revenues $15.63 Bil $14.98 Bil $13.76 Bil $11.13 Bil $9.41 Bil $6.85 Bil $4.56 Bil $4.38 Bil $2.95 Bil $2.23 Bil $1.74 Bil | Earnings $3.78 $3.54 $2.79 $1.85 $1.56 $0.51 $-0.82 $-0.48 $0.33 $1.24 $0.80 | Dividends $2.10 $2.00 $1.40 $1.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 | Payout Ratio 55.55% 56.49% 50.17% 55.55% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% |
| Revenue Growth Rate 1 yr = 23.62% 2 yr = 20.92% 3 yr = 25.88% 4 yr = 31.79% 5 yr = 25.72% 8 yr = 29.49% | Earnings Growth Rate 1 yr = 50.81% 2 yr = 33.73% 3 yr = 75.20% 4 yr = N/A 5 yr = N/A 8 yr = 16.89% | Dividend Growth Rate 1 yr = 40.00% 2 yr = N/A 3 yr = N/A 4 yr = N/A 5 yr = N/A 8 yr = N/A |
My Perspective
I think that the gambling, convention and hotel businesses are thriving businesses and Las Vegas Sands Corp, by virtue of it being in all three at the same time, has the advantage of benefiting from the synergy that naturally occurs between the three businesses. Th history of this company also reminds me that the success of this industry can also be dependent on a good world economy. LVS appears to be a solid investment but it's not one of those companies that an investor can buy and ignore.
I like this company and this industry and I am beginning to accumulate shares in LVS. I like its rich dividend, it's expected one year estimated ROIC, and its moderate P/E ratio. While I tend to invest in companies with a longer history of paying dividends, it appears that dividend increases will continue in 2015 and beyond.
I like this company and this industry and I am beginning to accumulate shares in LVS. I like its rich dividend, it's expected one year estimated ROIC, and its moderate P/E ratio. While I tend to invest in companies with a longer history of paying dividends, it appears that dividend increases will continue in 2015 and beyond.
The Live Interactive Chart
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