We've been asking ourselves recently if the market has placed a fair valuation on Las Vegas Sands. Let's dive into some of the fundamental values of this large-cap Consumer Discretionary company to determine if there might be an opportunity here for value-minded investors.
Las Vegas Sands's P/B and P/E Ratios Are Higher Than Average:
Las Vegas Sands Corp., together with its subsidiaries, develops, owns, and operates integrated resorts in Macao and Singapore. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, Las Vegas Sands has a trailing 12 month P/E ratio of 56.6 and a P/B ratio of 8.27.
When we divideLas Vegas Sands's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.45, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $13,729 | $12,127 | $2,940 | $4,234 | $4,110 | $8,574 |
| Gross Margins | 27% | 28% | -47% | -16% | -19% | 17% |
| Operating Margins | 27% | 30% | -47% | -16% | -19% | 17% |
| Net Margins | 21% | 27% | -16% | -7% | 45% | 8% |
| Net Income (MM) | $2,951 | $3,304 | -$458 | -$315 | $1,832 | $693 |
| Net Interest Expense (MM) | $446 | $449 | $523 | $621 | $702 | $829 |
| Depreciation & Amort. (MM) | $1,111 | $1,020 | $997 | $1,041 | $1,036 | $1,131 |
| Earnings Per Share | $3.07 | $3.5 | -$2.21 | -$1.26 | $2.4 | $0.88 |
| Diluted Shares (MM) | 786 | 771 | 764 | 764 | 764 | 771 |
| Free Cash Flow (MM) | $3,752 | $2,020 | -$2,539 | -$1,071 | -$1,595 | $1,278 |
| Capital Expenditures (MM) | $949 | $1,018 | $1,227 | $828 | $651 | $839 |
| Net Current Assets (MM) | -$10,236 | -$11,387 | -$11,562 | -$12,301 | -$11,639 | -$11,500 |
| Long Term Debt (MM) | $11,874 | $12,422 | $13,929 | $14,721 | $13,947 | $12,576 |
| Net Debt / EBITDA | 1.52 | 2.29 | -35.6 | 39.74 | 39.65 | 3.44 |
Las Vegas Sands suffers from declining revenues and a flat capital expenditure trend, slimmer gross margins than its peers, and consistently negative margins with a negative growth trend. The firm's financial statements also exhibit declining EPS growth and a highly leveraged balance sheet. Las Vegas Sands has irregular cash flows.
