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5 Leisure Stocks Set to Beat Estimates This Earnings Season

Zacks Equity Research

Despite moderate economic growth, the leisure industry may not shine as bright in the current reporting cycle. This is because stocks in this space remain volatile given the tricky nature of consumer discretionary spending. Also, inflation and tariff concerns are intermittently affecting leisure stocks.

Strong Demand Aids Industry Returns

The Leisure and Recreation Products  industry (comprising companies providing leisure products such as outdoor equipment, swimming pool and sports) have outperformed the S&P 500 index in the last three months, while Leisure and Recreation Services industry (covering companies that provide recreational services such as cruise and travel) have underperformed the same. The industries have gained 11.7% and 6.7%, respectively, as compared with the S&P 500’s 8.1% rally.

The rise in share prices can be attributed to rising personal expenditure which in turn drove demand for leisure services. Also, leisure stocks’ results are likely to have benefited in the first quarter from healthy economic conditions, as is validated by recent data.

 

Leisure Industry Earnings Outlook Not So Bright

On taking a closer look at the leisure industry’s earnings outlook in the first quarter, it is seen that the leisure space may not have been able to tide over the broader challenges. The tariff issues may have had curtailed consumer spending on leisure services to an extent. Moreover, Trump’s stringent policies on immigration and tourist visas seem to have impelled international visitors to rethink vacation plans to the United States. This is evident from the continued slowdown in U.S.-bound air travel bookings.

The Zacks Consensus Estimates for Leisure and Recreation Products industry earnings has seen downward revisions of 18.3% over the first quarter. Also, the Leisure and Recreation Service industry has witnessed a downward revision of 35.9% in the past month.

Meanwhile, the Zacks Consumer Discretionary sector is anticipated to witness top-line growth of 9.8% in this reporting cycle (comparing unfavorably with fourth-quarter growth of 12.3%) while the bottom line is expected to deteriorate 8% (against fourth-quarter increase of 18.3%), per the latest Earnings Preview.

Picking the Right Stocks

Despite the above-mentioned concerns, there are a few stocks that investors can place their bets on. Using the Zacks methodology, we have identified five leisure stocks that are poised to beat earnings estimates this time around. Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Key Picks

Here are some leisure and recreation providers set to report first-quarter 2019 earnings that might interest investors.

YETI Holdings, Inc. YETI, a provider of outdoor equipment, has a Zacks Rank #2 and an Earnings ESP of +16.67%, suggesting a beat. The company, which is scheduled to report quarterly numbers on May 2, has a four-quarter average beat of 14.7%. The Zacks Consensus Estimate for earnings is pegged at 3 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S.-based theme park and entertainment company, SeaWorld Entertainment, Inc. SEAS is scheduled to report results on May 14. The company sports a Zacks Rank #1 and has an Earnings ESP of +6.45%. This suggests a beat in the quarter. SeaWorld surpassed the consensus estimate in each of the trailing four quarters, the average beat being 35.9%.

Cruise provider Norwegian Cruise Line Holdings Ltd. NCLH has a Zacks Rank #3 and an Earnings ESP of +0.53%, calling for an earnings beat this time around. The company surpassed estimates in the last four quarters, the average beat being 9.7%. The Zacks Consensus Estimate for earnings is pegged at 71 cents, indicating an 18.3% year-over-year increase from the year-ago reported figure.

Cedar Fair, L.P. FUN is expected to report quarterly results on May 8. The company currently carries a Zacks Rank #3 and has an Earnings ESP of +1.75%. This combination suggests a beat in the to-be-reported quarter. Cedar Fair missed estimates in two of the trailing four quarters, the average miss being 16.5%.

With a Zacks Rank #3 and an Earnings ESP of +8.23%, AMC Entertainment Holdings, Inc. AMC is likely to beat estimates in the to-be-reported quarter. In fact, it beat the Zacks Consensus Estimate in two of the trailing four quarters, the average positive surprise being 42.1%.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
 
AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report
 
Cedar Fair, L.P. (FUN) : Free Stock Analysis Report
 
SeaWorld Entertainment, Inc. (SEAS) : Free Stock Analysis Report
 
YETI Holdings, Inc. (YETI) : Free Stock Analysis Report
 
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