Las Vegas Sands (LVS) Earnings Preview

Secondary plays in Macao and the Las Vegas Strip: MGM, MPEL, WYNN;
Other Nevada casino cos: ASCA, BYD, MCRI, RIV;
Other casino cos: CNTY, DDE, ISLE, LACO, MNTG, NYNY, PNK, TRMP, UWN.

Las Vegas Sands (LVS) is scheduled to report Q4 earnings today after the close, with a conference call to follow at 16:30ET. First Call expects non-GAAP EPS of $0.35 with revenue of $1.119 bln. The co typically does not provide guidance. It is attempting to get back on track after missing badly on the bottom line last quarter, its second straight miss, following ten quarters of in-line or better than expected results. While revenue grew in the high teens for the third straight time last quarter, expect that growth rate to accelerate this quarter as it will be the first full quarter of results from the co's Venetian Macao... Last quarter, LVS had problems in both Macao and Las Vegas, and investors expect the co to right the ship in Q4. We'll take a look by casino. 1) Venetian Macao -- This will be the first full quarter of results following the official opening on Aug 28, but investors are already looking for improvement following disappointing numbers for the 34 days in Q3. Non-rolling Chip table games win percentage was 16.7% in Q3 vs. the co's expectations of 18-20%, with Rolling Chip table games win percentage 2.44% vs. its expectations of 3.0%. The co will release both the results and its expectations in the earnings release, so these are key metrics. 2) Sands Macao -- Casino revenue and EBITDAR decreased last quarter due to lower table games win percentage on Rolling Chip play (2.85% vs. the co's expectations of 3.0%), as well as lower Non-Rolling Chip table games drop. The co attributed the lower drop to weaker mass-market revenues (VIP increased yr/yr) as mass customers "shared more of their gaming time with new entrants to the marketplace." The casino had even more entrants to the marketplace in Q4 as the MGM Grand Macau opened on Dec 18. As with the Venetian Macao, Non-Rolling and Rolling Chip table games drop for Sands Macao will be key metrics, but even more important will be mass-market revenues. Investors are hoping the co did not continue losing customers, and there is the question of Venetian Macao taking customers away from Sands Macao -- something the co denied on its Q3 call. 3) The Venetian Las Vegas -- The hold percentage came in at its lowest level since 1999 (14.7% vs. co's expectations of 20-22%). It attributed the lower than expected number to visitors having a lucky streak. While that metric will be important again this quarter, another issue will be the opening of the co's luxury resort, The Palazzo, on Jan 21. While not open during Q4, investors will pay attention to any color the co provides on the first days of the opening... Shares of LVS have not fared well over the last three months. The stock gapped 6.8% lower on Nov 2 following the disappointing Q3 results. Then after consolidating over the next month, shares briefly set a post-earnings high of $122.96 on Dec 10 before plummeting ~40% over the next six weeks (along with other casino names and the market as a whole), touching a 15-mo low of $70.70 on Jan 22. The stock rebounded into the $80 level over the next two trading days and has consolidated heading into this earnings release.