We expect SeaWorld Entertainment, Inc. SEAS to beat expectations when it reports second-quarter 2015 results on Aug 6, before the market opens. Last quarter, the company posted a positive earnings surprise of 12.07%. Let us see what is in store this quarter.
Why a Likely Positive Surprise?
Our proven model shows that SeaWorld Entertainment is likely to beat earnings because it has the right combination of two key components.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +10%. This is very meaningful and a leading indicator of a likely positive earnings surprise.
Zacks Rank: SeaWorld Entertainment has a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. Meanwhile, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of SeaWorld Entertainment’s Zacks Rank #2 and +10% ESP makes us confident of an earnings beat.
What is Driving the Better-Than-Expected Earnings?
SeaWorld Entertainment is making all efforts to regain customers’ confidence after being hurt by negative publicity associated with the treatment of captive whales and the prolonged scrutiny of its employee safety practices. In order to clear its stance, this amusement and theme park company has come up with a new advertising campaign that stresses on its efficiency and contribution toward the protection and care of killer whales. Besides proving the claims of animal rights activists as false, it will explain how the company cares for its killer whales.
The company is trying to improve attendance at its theme parks through promotional offers. Moreover, it continues to organize consumer event programs like Food & Wine Festivals, Wild Days and Praise Waves to driver incremental attendance. Also, the launch of new thrills and coasters at its parks are commendable. These initiatives would attract customers, thereby improving attendance. Moreover, improving U.S. economy, lower gasoline and fuel prices and higher consumer spending environment would further help drive demand.
Notably, the company’s cost reduction efforts would aid profits in the soon-to-be reported quarter.
Other Stocks to Consider
SeaWorld Entertainment is not the only firm looking up this earnings season. We also anticipate earnings beat from three other companies in the leisure and recreational services industry and broader consumer discretionary sector:
Live Nation Entertainment, Inc. LYV has an Earnings ESP of +14.29% and a Zacks Rank #3 (Hold).
The Madison Square Garden Company MSG has an Earnings ESP of +4.76% and a Zacks Rank #3.
Guess' Inc. GES has an Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).
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