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Growth Investing Stocks (Archived)

LVS - Las Vegas Sands Corp.

Growth stocks are popular with investors as stocks with an increasing earnings trend tend to increase in value over the long-term.

In the July 2015 issue a fundamental analysis is conducted on a selected sample of stocks. The analysis is based on fundamental data from one year ago. This allows financial students and investors to see how the stock price performed over the next 12 months after the hypothetical purchase.

Las Vegas Sands Corp.

Las Vegas Sands Corp. NYSE:LVS is a large-cap company in the gambling industry which trades around $430 million worth of stock per day. The company's earnings have generally grown over the years and so has the revenue and employees.

The key fundamentals for LVS are shown below.

Growth fundamentals for LVS

YearRevenueEPS ROEBook ValueEmployees
20094560-0.55 -5%9.8027000
201068500.84 9%9.4034000
201194102.16 20%10.7040000
2012116001.85 22%8.6046000
2013137002.86 30%9.4048500

The fundamental data above shows that the earnings have generally grown for the last five years. The revenue has also shown good growth over the years as has the number of employees. The book value growth has stalled showing no real growth but the book value can be somewhat volatile. Also LVS does suffer from profit losing years every so often.

Fundamental Analysis for LVS:

The return on equity varies considerably but is around 30% at present. The profit margin (profit to revenue ratio) is strong and averages around 15% during LVSs profitable years.

The current ratio (current assets to current liabilities) averages around 2.5 which indicates that LVS has sufficient working capital.

The debt ratio (long-term debt to tangible assets) averages around 2.0 which means that LVS carries a significant amount of long-term debt. Intangible assets and goodwill are not included in the ratio calculation. The tangible assets are used for the ratio calculation because these are hard physical assets that can be sold off in the event of bankruptcy liquidation whereas intangibles and goodwill cannot be sold.

The total ratio (total liabilities to total assets) averages around 80% which means that LVSs total debt is 80% of its total assets.

The earnings growth for the 2014 fiscal year is projected to grow at 25% (based on the five year earnings growth trend). The revenue is projected to grow at 17% (based on the five year revenue growth trend).

The forward PE ratio is around 20 (calculated from the five year earnings growth trend rather than from forecast earnings). The forward PEG is around 0.8.

The current business valuation would drop to around $28 with no earnings growth (with a 2.5% ten year Treasury bond yield).

LVSs book value is around $9 and if LVS does run into financial problems in the future this gives an idea of how far the stock price could drop.

The bankruptcy risk can be calculated using the Z-score. LVSs Z-score is 2.5 which means LVS is a moderate bankruptcy risk stock.

The sample analysis uses data that is one year old. The hypothetical purchase date for the stock is 19-Jun-2014 and this allows the reader to see how the stock performed over the next year.

LVS had its 2014/03 quarterly results released prior to 19-Jun-2014 and this information is available for the analysis. The 2014 Q1 earnings showed a decline of 36% over the same quarter from a year ago (2013 Q1).

Overall the fundamentals are strong with this growth stock. Additional information such as consensus forecast earnings, broker recommendations and insider transactions are not considered for this sample analysis. A hypothetical position taken in LVS on the 19-Jun-2014 would give a purchase price of around $75.

The stock price performance is shown below in Chart 2. along with the annual earnings year to year growth.

Chart 2. Stock chart with earnings for LVS

weekly Chart LVS

As shown in Chart 2. above, LVSs stock price declined by 30% to around $53 over the next year. The 2014 annual earnings declined by 24% over the 2013 annual earnings.

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