Investors Interested In Las Vegas Sands Corp.'s (NYSE:LVS) Revenues

Las Vegas Sands Corp. -0.92%

Las Vegas Sands Corp.

LVS

45.46

-0.92%

When you see that almost half of the companies in the Hospitality industry in the United States have price-to-sales ratios (or "P/S") below 1.3x, Las Vegas Sands Corp. (NYSE:LVS) looks to be giving off strong sell signals with its 4.3x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

View our latest analysis for Las Vegas Sands

ps-multiple-vs-industry
NYSE:LVS Price to Sales Ratio vs Industry December 29th 2023

What Does Las Vegas Sands' P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, Las Vegas Sands has been doing relatively well. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Las Vegas Sands.

How Is Las Vegas Sands' Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Las Vegas Sands' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 114% gain to the company's top line. Pleasingly, revenue has also lifted 58% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 18% per year during the coming three years according to the twelve analysts following the company. That's shaping up to be materially higher than the 13% per year growth forecast for the broader industry.

In light of this, it's understandable that Las Vegas Sands' P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Las Vegas Sands maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Hospitality industry, as expected. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

Having said that, be aware Las Vegas Sands is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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