Las Vegas Sands Investors: Don't Bet Against The House

Shares of Las Vegas Sands Corp. LVS sold off on Thursday after the company's fourth quarter earnings report consisted of a top and bottom line miss.

According to Gadfly's David Fickling, there is one important lesson that holds true for casino patrons and Las Vegas Sands' shareholders: don't bet against the house.

Fickling argued that while Las Vegas Sands' bread and butter segment of Macau appears to be richly valued, Sands happens to be the cheapest of the group. And it just so happens that the Macau casino market is the hottest it has been for some time.

Meanwhile, some analysts attribute the stock's cheap multiple to the company's newly opened Parisian resort cannibalizes revenue from its other properties, namely Sands Cotai Central and the Venetian.

"That seems excessive," Fickling argued. "Cannibalism is generally resorted to only in times of extreme famine -- but Macau is experiencing something of a feast."

Fickling noted that Sands China is the biggest hotelier and accounts for around one third of the city's entire 35,500 available rooms. In fact, there is no evidence to suggest that Sands China has built more rooms than the market can handle.

Bottom line, betting against Las Vegas Sands is a bet against Macau itself and naturally should be avoided.