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Let's talk about the popular Las Vegas Sands Corp. (NYSE:LVS). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$55.17 at one point, and dropping to the lows of US$43.98. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Las Vegas Sands' current trading price of US$44.40 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Las Vegas Sands’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Las Vegas Sands
Is Las Vegas Sands Still Cheap?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Las Vegas Sands’s ratio of 21.4x is trading slightly below its industry peers’ ratio of 22.95x, which means if you buy Las Vegas Sands today, you’d be paying a reasonable price for it. And if you believe Las Vegas Sands should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Las Vegas Sands’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Las Vegas Sands generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 68% over the next couple of years, the future seems bright for Las Vegas Sands. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? LVS’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at LVS? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?