Las Vegas Sands Corp. (LVS) is set to report fourth-quarter 2014 results on Jan 28, after the market closes. Last quarter, the company posted in-line earnings. Let us see what is in store for the stock in this quarter.
Factors to Consider
Las Vegas Sands is a leading companies in the gaming and lodging industry and earns a better part of its revenues from Macau, China. However, China's crackdown on illegal money transfers, credit growth concerns, tighter restrictions on visas have posed considerable threats to Macau’s gaming revenues, which have raised concerns for gaming companies like Las Vegas Sands. Additionally, smoking ban in casinos and the protests in Hong Kong compounded to the woes.
Gross gaming revenues in the Macau region have been declining since Jun 2014. In fact, Macau gaming revenues plunged in all three months of the quarter in double digits, due to the anti-graft corruption drive taken by the Chinese government. Given the current scenario, we believe that it would be a tough quarter for the company once again.
Over the last 30 days, estimates have largely declined for fourth quarter quarter as well as for 2014.
Earnings Whispers?
Our proven model does not conclusively show that Las Vegas Sands is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The company’s Earnings ESP stands at -3.66%. This is because the Most Accurate estimate is pegged at 79 cents while the Zacks Consensus Estimate stands at 82 cents.
Zacks Rank: Las Vegas Sands has a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some other companies in the gaming industry and consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Penn National Gaming Inc. (PENN) with an Earnings ESP of +40.00% and a Zacks Rank #2 (Buy).
Choice Hotels International Inc. (CHH) with an Earnings ESP of +2.70% and a Zacks Rank #1 (Strong Buy).
GoPro, Inc. (GPRO) with an Earnings ESP of +3.23% and a Zacks Rank #2.
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