Proposed changes to Macau’s gaming law and increased regulatory oversight, along with a prolonged slump due to the coronavirus crisis Las Vegas Sands Stock (NYSE: LVS). In particular, Sands’ current market capitalization of $ 27 billion Draft Kings‘(NASDAQ: DKNG) $ 20 billion. The US sports betting and iGaming industry can exceed $ 40 billion at maturity, but Flutter Entertainment’s FanDuel’s 40% market share makes DraftKings the second choice for Panthers. In addition, multiple sports betting applications such as bet365, HardRockCafé, BetMGM, Barstool and William Hill show fierce competition in the early industry. Given Las Vegas Sands’ high profitability, a significant drop in market capital, and effective cost control during the pandemic, we consider Trephis to be a better option than Draft King. Interactive dashboard analysis compares historical revenue growth, revenue, multiples of valuation, and many other factors. Las Vegas Sands vs DraftKings: Industry buddies; which stock is a better bet? (Related: Consider Las Vegas Sands over DraftKings in a sports betting frenzy?).
1. Revenue growth
DraftKings growth has been much stronger than Las Vegas Sands over the last two years, with DKNG revenues growing more than 50% annually from $ 226 million in 2018 to $ 614 million in 2020. I am. Las Vegas Sands Revenue Sands averaged 4% annually from $ 12.7 billion in 2017 to $ 13.7 billion in 2019, and then fell 73% to $ 3.6 billion in 2020. Of total income.
- Prior to the pandemic, real estate in Sands Macao, Las Vegas and Singapore accounted for 63%, 15% and 22% of total revenue, respectively. The company’s Macau business has grown strongly, supported by new property openings, game betting on the mass market, and an increase in tourist influx. Due to the financial impact of the real estate closure, Sands completely shifted its focus to Asian real estate by announcing the sale of Las Vegas real estate in the first quarter.
- However, given the long-term growth plans associated with Asia, especially Macau, Macau’s proposed game law changes to tighten regulatory oversight of dividend payments are a headwind for Sands.
- DraftKings online games, gaming software, and other segments account for 84%, 12%, and 4% of total revenue, respectively. Over the last two years, the average monthly unique player and average monthly revenue per unique player have increased by 47% and 65%, respectively, resulting in a significant increase in revenue.
- While the traditional casino industry has seen shrinkage due to restrictions and intermittent blockades during pandemics, DraftKings online casinos have reported strong growth.
- According to analysts’ presentations, DraftKings expects to achieve a 20-30% share of the $ 21 billion sports betting market and a 10-20% share of the $ 18 billion iGaming market at maturity. Therefore, the company’s revenue could reach nearly $ 5 billion in the long run.
2. Returns (profit)
Sands is a 30-year-old company, a leading operator of integrated resorts, and a well-established brand with a consistent capital return policy. The company’s 20% net profit margin is key to regular dividend payments. On the contrary, DraftKings is currently on a growth track with key focus on expanding top lines and gaining market share.
- In 2019, Sands reported net sales of $ 13.7 billion and operating cash flow of $ 3 billion. This shows that the operating cash flow margin is 22%. In addition, the company returned $ 3 billion in dividends to shareholders.
- DraftKings reported revenue of $ 614 million and a net loss of $ 844 million in 2020. The company burned $ 338 million in operating cash and raised capital from the issuance of shares.
According to a recent submission, Sands reported $ 14 billion in long-term debt, $ 3 billion in total equity, and $ 20 billion in total assets. DraftKings balance sheets, on the other hand, have no long-term debt. Instead, DKNG reported total capital of $ 2.2 billion and total assets of $ 4.4 billion. This includes $ 2.6 billion in cash and $ 1.1 billion in intangible assets and goodwill.
- Despite the prolonged slump caused by the coronavirus crisis, Sands does not bear significant impairment costs. In addition, the company’s cost controls limited operating cash burns in 2020 to only $ 1.3 billion and $ 105 million in the first half of 2021.
- Therefore, Sands’ $ 12 billion in assets and equipment on its balance sheet could bring strong profits as its operations in Macau and Singapore return to normal. As I emphasized in the previous article, Should I bet on Las Vegas Sands shares after a historic announcement?The Singapore and Macau properties of Sands generate EBITDA margins of 54% and 36%, respectively.
- The DraftKings balance sheet consists of more cash and intangible assets. Therefore, the current market capitalization of a stock is linked to long-term earnings growth and profitability expectations.
- Given Sands’ strong cost controls, low cash burn rates, and high historical asset returns, it looks like a safer bet on DraftKings.
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