Long-established in the Travel & Leisure industry, Las Vegas Sands Corp (LVS, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.61%, juxtaposed with a three-month change of 15.69%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Las Vegas Sands Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 1/10
- GF Value rank: 4/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Las Vegas Sands Corp the GF Score of 65 out of 100, which signals poor future outperformance potential.
Understanding Las Vegas Sands Corp Business
Las Vegas Sands Corp, with a market cap of $38.05 billion and sales of $8.574 billion, is the world's largest operator of fully integrated resorts. These resorts encompass casino, hotel, entertainment, food and beverage, retail, and convention center operations. The company's portfolio includes the Venetian Macao, Sands Macao, Londoner Macao, Four Seasons Hotel Macao, and Parisian Macao, as well as the Marina Bay Sands resort in Singapore. Following the sale of its Venetian and Palazzo Las Vegas assets in the U.S. for $6.25 billion in 2022, Las Vegas Sands Corp now generates all its EBITDA from Asia, primarily through its casino operations. A fourth tower is expected to open in Singapore in 2029, indicating the company's continued investment in its Asian market presence.
Financial Strength Breakdown
Las Vegas Sands Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 1.76 positions it worse than 73.43% of 591 companies in the Travel & Leisure industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The Altman Z-Score of just 2.21, which is below the safe threshold of 2.99, further indicates potential financial struggles.
The company's low cash-to-debt ratio at 0.39 and a debt-to-equity ratio of 3.16, which is worse than 88.58% of companies in the industry, suggest an over-reliance on borrowing. Moreover, the debt-to-Ebitda ratio of 4.94 exceeds Joel Tillinghast's warning level of 4, indicating a red flag unless tangible assets cover the debt.
Growth Prospects
A lack of significant growth is another area where Las Vegas Sands Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by an average of -30.1% per year over the past three years, which underperforms worse than 89.28% of 765 companies in the Travel & Leisure industry. Additionally, Las Vegas Sands Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering Las Vegas Sands Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. The company's challenges in managing debt, coupled with declining revenues and low predictability, paint a cautious picture for investors. While the company's historical reputation in the industry is notable, current indicators suggest that it may struggle to replicate past successes in the near future.
For investors seeking to identify more robust investment opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
