Proposed changes to the Macau Gaming Act and increased regulatory oversight, plus further declines due to the coronavirus crisis in Las Vegas Sands Stock (NYSE:LVS). More specifically, Sands’ current market cap is $27 billion at Draft Kings (NASDAQ:DKNG) $20 billion. The US sports betting and iGaming industry could exceed $40 billion at maturity, but Flutter Entertainment’s 40% market share makes FanDuel the second choice for Panthers.
In addition, many sports betting applications such as bet365, HardRockCafé, BetMGM, Barstool, and William Hill show stiff competition in the early industry. Given Las Vegas Sands’ high profitability, significant drop in market capital, and effective cost control during the pandemic, we believe Trephis is a better choice than Draft King.
Interactive dashboard analysis compares historical sales growth, sales, multiple valuation values and many other factors. Las Vegas Sands vs. DraftKings: Industry Friend; Which stock is better? (Related: Think Las Vegas Sands on DraftKings at Sports Betting Madness?)
1. Sales growth
‘DraftKings’ growth has been much faster than Las Vegas Sands’ over the past two years, with DKNG’s revenue growing more than 50% annually, from $226 million in 2018 to $614 million in 2020 . Las Vegas Sands Sands revenue increased by an average of 4% per year from $12.7 billion in 2017 to $13.7 billion in 2019, then fell 73% to $3.6 billion in 2020. Of total revenue.
Prior to the pandemic, real estate in Sands Macau, Las Vegas and Singapore accounted for 63%, 15% and 22% of total sales, respectively. The company’s business in Macau is booming, helped by the opening of new properties, mass market gambling, and an increased flow of tourists. Due to the financial impact of property closures, Sands has completely shifted its focus to Asian properties and announced the sale of properties in Las Vegas in the first quarter.
However, given the long-term growth plans for Asia, Macau in particular, Macau’s proposed amendment to the gambling law to tighten regulatory oversight over dividend payments is a drag.
DraftKings online games, game software and other segments accounted for 84%, 12% and 4% of total sales, respectively.
Over the past two years, the average monthly unique player and the average unique player monthly earnings increased 47% and 65%, respectively, resulting in a significant increase in sales.
While the traditional casino industry has shrunk due to periodic restrictions and deadlocks during the pandemic, DraftKings online casino has seen strong growth.
According to analyst presentations, when due, DraftKings expects a 20-30% share of the $21 billion sports betting market and a 10-20% share of the $18 billion iGaming market. As a result, the company’s revenue could reach nearly $5 billion in the long run.
2. Return (profit)
Sands is a 30 year old company, a leading integrated resort operator and an established brand with a consistent return on investment policy. The company’s net profit margin is the key to making regular dividend payments. In contrast, DraftKings is currently on a growth path with a primary focus on expanding sales and gaining market share.
In 2019, Sands reported net sales of $13.7 billion and operating cash flow of $3 billion. This indicates that the operating cash flow margin is 22%. In addition, the company paid out $3 billion in dividends to shareholders.
DraftKings reported sales of $614 million and a net loss of $844 million in 2020. The company burned $338 million in working capital and raised capital through share issuance.
According to a recent presentation, Sands reported $14 billion in long-term debt, $3 billion in equity, and $20 billion in total assets. DraftKings balance sheet, on the other hand, contains no long-term debt. In contrast, 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 continued decline due to the coronavirus crisis, Sands did not experience a significant decline. Additionally, the company’s spending controls limit operating cash outlays to just $1.3 billion in 2020 and $105 million in the first half of 2021.
As a result, Sands’ assets and equipment on its $12 billion balance sheet could be a huge gain if activity in Macau and Singapore returns to normal. As I mentioned in a previous article, should I bet on Las Vegas Sands stocks after the historic announcement? Sands properties in Singapore and Macau generate EBITDA margins of 54% and 36%, respectively.
DraftKings balance sheet consists of more cash and intangible assets. Therefore, the current stock market capitalization is related to long-term earnings growth and profitability expectations.
Given Sands’ strong cost control, low burnout rate, and high ROI in the past, this seems a safer choice for DraftKings.