We expect California-based entertainment company
Live Nation Entertainment, Inc.
) 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
, 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.
: 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
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
Choice Hotels International Inc. (
), with an Earnings ESP of +2.04% and a Zacks Rank #2 (Buy).
Six Flags Entertainment Corp. (
), with an Earnings ESP of +0.65% and a Zacks Rank #3.
MGM Resorts International (
), with an Earnings ESP of +45.45% and a Zacks Rank #3.
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LIVE NATION ENT (LYV): Free Stock Analysis
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