Will Live Nation (LYV) Beat Q2 Earnings on Revenue Growth? - Analyst Blog

By Zacks Equity Research,

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We expect California-based entertainment company Live Nation Entertainment, Inc. ( LYV ) to beat expectations when it reports second-quarter 2014 results on Jul 31, after the market closes.

Why a Likely Positive Surprise?

Our proven model shows that Live Nation is likely to beat earnings because it has the right combination of two key components.

Positive Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +31.25%. This is very meaningful and a leading indicator of a likely positive earnings surprise for the company.

Zacks Rank : Live Nation has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of Live Nation's Zacks Rank #3 and +31.25% ESP makes us confident of an earnings beat.

What is Driving the Better-Than-Expected Earnings?

Live Nation operates in four segments: Concerts, Ticketing, Artist Nation and Sponsorship & Advertising. The company managed to grow revenues in all its segments in the prior quarter, despite the inclement weather. Revenues were strongest in the Concerts segment. With weather conditions normalizing, revenues should improve in the second quarter.

Additionally, Live Nation's ticketing business operates under the well-known brand of Ticketmaster, the leading ticketing sales platform. The company has a significant presence in this high-margin agency business where it charges a fee to sell tickets on behalf of its clients. We believe the ticketing segment will continue its revenue growth momentum in the coming quarter as well.

However, we remain aware of the escalating costs, especially in the Concerts segment. Despite achieving stellar revenue growth, high operating costs associated with concert organizing has led the segment to post losses for the last three years. Such high operating costs amid a sluggishly recovering economy is a concern.

Other Stocks to Consider

Live Nation is not the only firm looking up this earnings season. We also expect earnings beat from three other companies in this industry:

Choice Hotels International Inc. ( CHH ), with an Earnings ESP of +2.04% and a Zacks Rank #2 (Buy).

Six Flags Entertainment Corp. ( SIX ), with an Earnings ESP of +0.65% and a Zacks Rank #3.

MGM Resorts International ( MGM ), with an Earnings ESP of +45.45% and a Zacks Rank #3.

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LIVE NATION ENT (LYV): Free Stock Analysis Report

MGM RESORTS INT (MGM): Free Stock Analysis Report

CHOICE HTL INTL (CHH): Free Stock Analysis Report

SIX FLAGS ENTMT (SIX): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: LYV , MGM , CHH , SIX

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