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Isle of Capri (ISLE) Upped to Strong Buy on Solid Q2 Results - Analyst Blog

Zacks Equity Research
Updated

On Jan 3, Zacks Investment Research upgraded Isle of Capri Casinos, Inc. (ISLE) to a Zacks Rank #1 (Strong Buy). The developer of regional gaming facilities has been witnessing an upward trend in earnings estimates ever since it reported strong fiscal second-quarter 2015 results on Dec 2, 2014. Further, Isle of Capri shares rose nearly 12% since then.

Why the Upgrade?

Isle of Capri’s second-quarter earnings as well as revenues beat the Zacks Consensus Estimate. Adjusted earnings of 2 cents compared favorably with the Zacks Consensus Estimate of a loss of 3 cents. Further, earnings compared favorably with the year-over-year loss of 21 cents, primarily due to higher revenues and increased adjusted EBITDA margin.

In fact, the company’s revenues of $238.9 million beat the Zacks Consensus Estimate of $233 million. Also, it increased 3.2% year over year primarily due to higher Casino revenues and Food, beverage, pari-mutuel and other revenues. Strong revenues from the Pennsylvania region also aided revenues. The company’s geographic diversity, which is reflected in its presence in the secondary gaming markets of U.S., is expected to continue to boost its revenues in the near term.

Further, Isle of Capri benefited from its profit improvement initiatives. For the second consecutive quarter, visits increased in the company’s profitable retail customers segment. Apart from this, visits by high-end segment customers increased. It seems the company’s restyled marketing programs and promotions on driving business in the top segments are yielding positive results.

Such favorable earnings and positive sentiment surrounding the stock resulted in the estimate revisions moving north in the past 30 days, and prompted us to upgrade it to a Zacks Rank #1.

Other Stocks to Consider

In the broader Leisure services sector, investors may consider Vail Resorts Inc. (MTN), Interval Leisure Group, Inc. (IILG) and Live Nation Entertainment, Inc. (LYV). While Vail Resorts and Interval Leisure sport the same Zacks Rank as Isle of Capri, Live Nation Entertainment carries a Zacks Rank #2 (Buy).


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INTERVAL LEISUR (IILG): Free Stock Analysis Report
 
LIVE NATION ENT (LYV): Free Stock Analysis Report
 
ISLE OF CAPRI (ISLE): Free Stock Analysis Report
 
VAIL RESORTS (MTN): Free Stock Analysis Report
 
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Zacks Investment Research