Las Vegas Sands Stock is Becoming a Bargain

Casino operator Las Vegas Sands NYSE: LVS stock is down (-37%) year-to-date (YTD) for 2021 despite the S&P 500 index NYSEARCA: SPY continues making new highs. Fears of extended delays in the reopening efforts in Macau saddled by travel restrictions emanating from the Covid-19 Delta variant is depressing casino stocks. Casinos with operations in Macau and international locations are suffering worse than its domestic-only rivals. The China crackdown on dual-listed companies may also be providing a layer of paranoia in Companies that generate most of their top and bottom line there. Las Vegas Sands is a premier casino player left behind in the reopening with bargain valuations here on the hideous-looking three-month sell-off. The downtrending charts are ugly to say the least, but therein lies opportunity. Risk-tolerant, patient, and prudent investors can look for bargain entries on opportunistic pullback levels as LVS trades near its pandemic lows.

Q1 FY 2021 Earnings Release

On July 21, 2021, LVS reported its Q2 2021 earnings for the quarter that ended in June 2021. The Company reported an earnings-per-share loss of (-$0.26) falling short of consensus analyst estimates for a loss of (-$0.17), a (-$0.09) miss. Revenues rose 1,095% year-over-year (YoY) to $1.17 billion but still missed analyst expectations by (-$215.2 million). Pandemic related travel restrictions and reduced visitation continue to impact its results. As of June 30, 2021, the unrestricted cash balance was $2.06 billion with access to $3.94 billion in revolvers. Total debt excluding finance leases was $14.42 billion at the end of the quarter. Las Vegas Sands CEO Robert Goldstein commented, "We remain enthusiastic about the opportunity to welcome more guests back to our properties as greater volumes of visitors are eventually able to travel to Macao and Singapore. We also remain deeply committed to supporting our team members and to helping those in need in each of our local communities as they recover from the impact of the COVID-19 pandemic. We remain confident in the eventual recovery in travel and tourism spending across our markets.  Demand for our offerings from customers who have been able to visit remains robust, but pandemic-related travel restrictions in both Macao and Singapore continue to limit visitation and hinder our current financial performance."

Conference Call Takeaways

CEO Goldstein set the tone delving straight into the area of pain, Our Macao performance reflected sequential improvement, but pandemic-related travel restrictions continued to impact our performance. We do remain confident in the eventual recovery in both Macao and Singapore, and we cannot define the timing of the full recovery, but it’s underway and will continue in 2021.” He continued, “Singapore remains in the $500 million to $600 million range annually, although the second quarter was impacted by heightened pandemic-related restrictions for a portion of the quarter. We will also be subject to closures of both portions of MBS from today to August 5th as part of COVID-19-related protocols. This will obviously have a negative impact on Q3 results. In addition, there remains no visibility as to when air traffic will return in Singapore. Unlike Macao, it is difficult to project additional EBITDA from MBS until the resumption of air travel. Our considerable investment in Macao continues to take shape. As the market recovers Four Seasons and the Londoner will represent growth opportunities, and we continue to have the largest footprint in this incredible market.” He concluded with measured optimism, “We are confident we’ll return to a $5 billion-plus EBITDA from Asia in the future. The sale of the Las Vegas assets creates liquidity and vast optionality to explore large land-based destination resorts in the United States and Asia and finally, we’re in the early innings of building out our digital presence. We’re exploring multiple opportunities at the present and we are eager to have this effort become material to our company in the years ahead and we’ll update you at the appropriate time.”

LVS Price Trajectories

Using the rifle charts on the weekly and daily times frames enable a precision view on the price action for LVS stock. The weekly rifle chart has been in a 12-week downtrend making consecutive lower lows. LVS shares formed a double top off the $66.72 Fibonacci (fib) level in March triggering a weekly market structure high (MSH) sell signal at $57.77 in May and hasn’t look back since. This is pretty ugly considering the benchmark indices like the S&P 500 and Dow Jones Industrial Average has been making new all-time highs in the backdrop. The weekly 5-period moving average resistance continues to plummet at $41.30. The weekly lower Bollinger Bands (BBs) sit at the pandemic lows near $33.30. The weekly stochastic has been smothered, buried, and forgotten under the 20-band for two months. The daily rifle chart has an inverse pup breakdown with a falling 5-period MA at $38.13 and lower BBs at $35.05. The daily stochastic sits at the 10-band with potential for another mini inverse pup or a daily market structure low (MSL) buy trigger on a breakout above $37.80 and $41.52. Prudent investors can watch for opportunistic pullback levels at the $36.80 fib, $35.51 sticky 5s, $34.35 sticky 5s, $33.30 pandemic low, $31.49 fib, and the $29.28 fib. Upside trajectories range from the $46.64 fib to the $64.54 fib level.