Will Las Vegas Sands Stock Climb The Ladder Again?

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shares of Las Vegas Sands (NYSE:LVS) And Penn National Gaming (NASDAQ:PEN) Q1 2021 has seen a deep contraction after witnessing a strong rally. Anticipation of heightened regulatory oversight in Macau was the leading cause of pessimism in Las Vegas Sands stock, but China’s adherence to geopolitical tensions, skyrocketing inflation, and a tighter pandemic response is growing. To the fire For Penn, the highly competitive rivalry in the US sports betting and iGaming markets favors the bears. Leaving the current volatile environment, Las Vegas Sands has a strong balance sheet, superior profitability metrics and a leadership position in Macau’s massive gaming market. Conversely, Penn’s sports betting application Barstool is also gaining popularity in the US, given the low intensity of the competitive rivalry faced by the Las Vegas Sands, which Treffis believes is the key to achieving long-term gains. This is a better pick. We compare multiple factors such as historical revenue growth, returns and valuation multiples in an interactive dashboard analysis, Las Vegas Sands vs. Penn National Gaming
:With a return forecast of 223%, Las Vegas Sands is a better bet

increase in revenue

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Penn National’s growth was much stronger than that of Las Vegas Sands before the pandemic, in which pen earnings grew from $3 billion in 2016 to $5.3 billion in 2019 at an average rate of 20% per year, versus Las Vegas Sands Revenue Which grew at an average rate of 7% per year from $11.2 billion in 2016 to $13.7 billion in 2019. Penn’s revenue fully recovered to pre-pandemic levels in 2021 after seeing a steep decline a year earlier. However, the sands are seeing a steady decline due to the ongoing COVID-related restriction measures in China and Macau.

  • Penn National’s core services, including gaming, food and beverage, hotels, and others, contribute 84%, 5%, 4%, and 7%, respectively, of total revenue. In recent years, the company’s topline expansion has been fueled by a number of acquisitions. Notably, slot machines contribute about 90% to gaming revenue, with a casino win rate of 7%.
  • Penn National Gaming is committed to the long-term success of Barstool, a sports betting application. In 2021, Penn’s interactive gaming segment contributed 7% of total revenue, which is expected to reach meaningful levels by 2023.
  • Before the pandemic, properties in Sands Macau, Vegas and Singapore accounted for 63%, 15% and 22%, respectively, of total revenue. The company’s Macau business was seeing strong growth driven by new property openings, mass market gaming stakes and growing tourist inflows. As temporary property closures resulted in operating losses, the company completely shifted its focus to high-growth areas in Asia and completed the sale of its Vegas resort in the first quarter.
  • The traditional casino industry saw contraction from restriction measures and intermittent lockdowns during the pandemic, but the online sports betting and iGaming businesses reported strong growth numbers. Notably, the online sports betting and iGaming markets in the US are expected to reach $22 billion and $40 billion respectively upon maturity.
  • Currently, proposed changes to Macau’s gaming law and casino license extension modalities are suspected to affect all concessionaire operations and capital return policies. Thus, Sands is likely to see a headwind as its growth plans focus on Asia and Macau in particular. (related: Is Wynn Stock Ready to Roll Now?,

Return (Profit)

Before the pandemic, Sands reported a much higher operating profit margin and net margin than Penn National Gaming. However, revenue headwinds have been weighing on Sands’ profitability metrics in recent days.

  • The company’s high net income margin was key to regular dividend payments and stock repurchases before the pandemic. Thus, the company had a well-established capital return policy. In 2021, Sands reported net revenue of $4.2 billion and a $243 million operating cash burn.
  • In 2021, Penn National reported $5.9 billion of total revenue and $896 million of operating cash flow on an operating cash flow margin of 15%. The company used $1.1 million of operating cash on property, plant and equipment and acquisitions by raising additional long-term debt.


Per annual filing, Sands reported long-term debt of $14.7 billion, $2.3 billion of total equity and $20 billion in total assets. Whereas, Penn National reported $11.3 billion of long-term debt, $4 billion of total equity, and $16.8 billion in total assets. Las Vegas Sands has higher financial leverage than Penn National Gaming.

  • While higher financial leverage leads to higher cash burns during recessions, Sands’ stringent cost control measures have limited operating cash to just $1.4 billion over the past two years.
  • In 2019, Sands reported revenue of $12 billion — nearly three times Penn National’s $5.3 billion. However, Penn National’s comparable long-term debt obligations could be a drag on long-term shareholder returns if growth metrics stall.
  • Considering a scenario where business in Macau and Singapore returns to normal by the end of the year, Sands’ higher margin will generate more cash than Penn National Gaming. In our previous article, Should you bet on Las Vegas Sands stock after the historic announcement?We highlight strong margins for the Sands Singapore and Macau properties.

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