Las Vegas Sands Corp. Longs Holding 'A Handful Of Nothing' Recently
Traders and investors long on Las Vegas Sands Corp. (NYSE: LVS) have been in endurance mode for the last six months after the stock peaked at $88.28 in early March. Shares are down more than 30 percent in the time since.
So, what's happening at the company and its key markets that's causing this type of price weakness?
What The Bulls See...
A laundry list of the potentially bullish points for Las Vegas Sands include:
• The estimated enterprise value is 20 percent greater than the market capitalization of the company.
• The price-to-sales is only 3.38, versus a “fair value” of 5.
• The company boasts gross profit margins of over 26 percent and net profit margins in excess of 17 percent.
• The positive margins translate to positive levered free cash flow of $2.52 billion annually.
• The company is in a good short-term financial position with a current ratio of 1.74.
• At this point, the stock is very oversold and is approaching short-term technical support.
What The Bears See...
On the other hand, the bears are focusing on the following points:
• The stock is not cheap if you look instead at the price-to-book ratio of 6.89 (fair value estimated to be 3) or the price-to-earnings of 15, compared to next year's estimated revenue and earnings growth of 7.6 percent and 12 percent respectively.
• Despite the current ratio of 1.74, the company carries a relatively high debt-to-equity ratio of 118.77 percent.
• The technical condition of the stock is absolutely miserable, despite being oversold.
What Do The Charts Say?
The technical crowd, meanwhile, notes that nothing goes down in a straight line, and nor will Las Vegas Sands' stock.
The stock almost certainly, according to them, will head lower eventually. However, it is very oversold already and has only a few dollars more on the downside before its next important support at $56.92 comes into play.
That level is support, they say, because: It represents the 138.2 percent Fibonacci price projection line for this decline, it is a key level of horizontal line support created by a heavy area of price congestion in 2013, and it represents where the stock's long-term uptrend line comes into play (approximately).
The technicians are of the mind to sell any rallies in Las Vegas Sands shares to the nearest resistance level, which comes in at the upper edge of the recent downside gap at $62.15.
Who Will Win Out?
From current levels, the bulls could see a bounce in shares up to the gap-created resistance at $62.15, but the bears seemingly have the edge in this story overall.
If support at $56.92 does not hold up, things could get even worse for the bulls in a hurry.
Disclosure: At the time of this writing, the author had no position in the equities mentioned in this report.
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