Why These Companies’ Earnings Reports Have Investors Excited This Morning

Las Vegas Sands Corp. (NYSE:LVS) is up by 4.27% in pre-market trading after reporting third quarter earnings of $0.66 per share on revenues of $2.89 billion. The casino operator’s earnings beat expectations by $0.02 per share while its revenues missed estimates by $80 million. Adjusted property EBITDA for Sands China declined by 33% year-over-year to $545 million, while adjusted EBITDA at Marino Bay Sands in Singapore rose by 10.8% year-over-year to $389.7 million.

Las Vegas Sands’ quarter wasn’t bad. Las Vegas Sands’ adjusted property EBITDA for Sands China declined less than Macau gaming revenues did, so the company is doing a good job at controlling costs and keeping market share. Tight cost controls will be important in maintaining profitability as more supply hits the market in 2016. Investors hope demand will rise more than supply will in 2016, however, as a Chinese representative in Macau recently said the central government will support Macau in ‘all aspects’. Shares of Las Vegas Sands look reasonable at a forward P/E of 18 and with a dividend yield of over 5%. Murray Stahl‘s Horizon Asset Management owns 748,969 shares.

Shares of discount airline Southwest Airlines Co (NYSE:LUV) surged by 3.24% after the company reported record third quarter earnings of $0.94 on revenues of $5.32 billion, beating estimates by $0.02 per share in earnings and $210 million in revenue. Return on invested capital before taxes and excluding special items was 31.1%, up from 19% year-over-year. The company also returned $549 million to shareholders in the form of dividends and share repurchases. Helping the results was a record quarterly load factor of 85.4%.

Although other airlines trade at lower forward valuations than Southwest, the stock is a good long-term holding because Southwest’s costs are lower and its growth potential is higher. The company’s profits are also a bit more sustainable than other airlines because Southwest hedges more for fuel. Economic fuel costs in the quarter were $2.20 per gallon, down from $2.94 per gallon in the third quarter of 2014.

Disclosure: None