International Speedway Corp. (ISCA), which promotes motorsports themed entertainment activities in the U.S., is set to report fourth-quarter and full-year 2014 results on Jan 27. Last quarter, it posted a positive earnings surprise of 100%. Let’s see how things are shaping up for this announcement.
Factors to Consider
International Speedway owns 13 different motorsports entertainment locations, including the renowned Daytona International Speedway, where NASCAR races are held. Analysts have been cautiously optimistic in the recent months about the company’s earnings and kept their estimates unchanged over the last 30 days. However, the stock has performed reasonably rising 3% over the past 30 days .
International Speedway gained the most after reporting better-than-expected third-quarter earnings. The company’s revenues increased roughly 11%, and although earnings declined year over year, both the metrics surpassed the respective Zacks Consensus Estimate.
In fact, the company’s revenues are benefitting due to sharp increases in television broadcast licensing revenues as well as concessions and merchandise sold at racetracks. In fact, broadcast rights represent the company’s biggest revenue segment and, with two of the world's largest media companies, NBC and FOX, promoting NASCAR racing, the company’s top line is expected to increase in the to-be-reported quarter.
Also, the fact that the company is drawing more and more corporate sponsors, like Toyota, for its Daytona Rising track — which is currently being renovated from the older Daytona International Speedway – should boost sponsorship revenues in the coming quarter.
Nevertheless, the racetrack business owners face plenty of challenges. Attendance numbers are still recovering for International Speedway's properties and are yet to touch the pre-recession levels. Further, costs related to the renovation of the Daytona International Speedway are expected to hurt the bottom line in the coming quarter.
Earnings Whispers?
Our proven model does not conclusively show that International Speedway is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 58 cents. Hence, the difference is 0.00%.
Zacks Rank: International Speedway’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult. Note that the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Stocks to Consider
Some stocks in the hotels and motels industry and broader consumer discretionary sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
Life Time Fitness, Inc. (LTM), with an Earnings ESP of +4.41% and a Zacks Rank #3.
The Marcus Corporation (MCS), with an Earnings ESP of +33.33% and a Zacks Rank #2 (Buy).
Royal Caribbean Cruises Ltd. (RCL), with an Earnings ESP of +21.95% and a Zacks Rank #1 (Strong Buy).
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