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Omar Venerio
Omar Venerio
Articles (1699) 

Brian Rogers Boosts Stake in Las Vegas Sands Before Q2 Results

In this article, let's take a look at Las Vegas Sands Corp. (NYSE:LVS), a $45.26 billion market cap company, which is a company that operates casinos in Las Vegas, Nevada; Macau, China; Bethlehem, Pennsylvania; and Singapore.

Attractive return

Brian Rogers (Trades, Portfolio) initiated the position in the first quarter of 2015 with 2.25 million shares at an average price of $55.74. In the second quarter, he added 44.44% to 3.25 million shares at $53.39. At those average prices, the guru invested $298.9 million and the profit was $13.2 million at current market prices or 4.4%.

Period

Shares Bought

% Change

Qtr. End Shares

Avrg. Price

 

2015Q1

New holding

New holding

2,250,000

$55.74

 

2015Q2

+1,000,000

Add 44.44%

3,250,000

$53.39

 
       
                 

Dividend yield

The company pays a quarterly dividend of $0.65 per common share, a 30% rise versus the year-ago quarter and an annual dividend of $2.6, yielding 4.05% and is close to five-year high. During the past 13 years, the highest trailing annual dividend yield was 4.49%, the lowest was 0.41%, and the median was 2.05%.

Q2 highlights

Revenues declined by 19.4% to $2.92 billion from $3.62 billion, but shares of the company rose more than 4% in after-hours trading after the company reported results for its second quarter. The casino company reported a quarterly profit of $469.2 million and earnings of $0.59 per share, compared to $671.4 million, or $0.83 per share in the same quarter from the previous year. Excluding items, the company's earnings were $0.60 per share from $0.85 per share. However, estimations were $0.61 per share on revenue of $2.99 billion.

The gross profit margin fell to 25.65% from 38.84% in the same time comparison and these contribute to decline in earnings.

Finally, let´s compare the best measure of performance for a firm's management: the return on equity. The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.

Ticker

Company

ROE (%)

LVS

Las Vegas Sands

33.05

IGT

International GameTechnology

3.62

BYI

Bally Technologies Inc.

45.96

PNK

Pinnacle Entertainment

26.27

BYD

Boyd Gaming Corporation

-4.05

 

Industry Median

5.7

The company has a current ROE of 33.05% which is higher than its peers. Also, it is higher than the ones exhibit by International Game Technology (NYSE:IGT), Pinnacle Entertainment (NASDAQ:PNK) and Boyd Gaming (NYSE:BYD). In general, analysts consider ROE ratios in the 15-20% range as representing attractive levels for investment. So for investors looking those levels or more, Bally Technologies (BYI) could be the option. It is very important to understand this metric before investing and it is important to look at the trend in ROE over time.

Quarter Ended

Mar-13

Jun-13

Sep-13

Dec13

Mar-14

Jun-14

Sep-14

Dec14

Mar-15

Jun-15

ROE (%)

31.80

28.58

33.24

30.29

41.53

36.89

37.10

40.01

28.52

26.40

Relative valuation

In terms of valuation, the stock sells at a trailing P/E of 19.2x, trading at a discount compared to an average of 23.0x for the industry. To use another metric, its price-to-book ratio of 6.41x indicates a premium versus the industry average of 1.76x while the price-to-sales ratio of 3.53x is above the industry average of 1.75x.

The stock price has an upward trend in the five-year period. If you had invested $10.000 five years ago, today you could have $24.423, which represents a 19.5% compound annual growth rate (CAGR).

Final comment

The casino-company operates in attractive regions with promising growth opportunities for the upcoming future.

The PE relative valuation and the return on equity that significantly exceeds the industry average make me feel bullish on this stock. Further, it has an attractive dividend yield in the industry.

Disclosure: Omar Venerio holds no position in any stocks mentioned

About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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