Melco Crown Entertainment Limited
) is slated to report its second-quarter 2014 results on Aug 7.
Last quarter, it posted a surprise of 9.76%. Let's see what is in
store this season.
Factors to Consider
Melco Crown that earns a better part of its revenues from Macau has
beaten the Zacks Consensus Estimate in the past four quarters on
the back of its flagship properties in the region. However, the
overall gaming business in Macau has slowed down since May 2014.
China's crackdown on illegal money transfers, credit growth
concerns, potential for tighter restrictions on visas and an
impending smoking ban in casinos are adversely affecting gambling
traffic in the Macau region, as evident from the sluggish Macau
gaming data released for the past two months. These factors have
kept gamblers at bay, primarily VIP gamblers.
Gross gaming revenue in Macau for the month of June declined 3.7%
to $3.4 billion - the first time since Jun 2009. The decline can be
attributed to the football World Cup that diverted some bettors and
tourists away from the world's largest gambling hub. For the month
of May, gross gaming revenues increased only 9.3% to $4.1 billion.
The May growth rate was lower than gross gaming revenue increase of
10.6% in the month of April and the lowest since February.
Moreover, the number fell short of analysts' expectation of 13.0%
to 15.0% growth.
Given the scenario, revenues of gaming companies like Melco Crown
are expected to be soft this quarter.
Our proven model does not conclusively show that Melco Crown is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Negative Zacks ESP:
The company's Earnings ESP, which represents the difference between
the Most Accurate estimate and the Zacks Consensus Estimate, stands
Zacks Rank #4(Sell)
: We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some companies in the gaming and consumer discretionary
sector that investors may consider, as our model shows that they
have the right combination of elements to post an earnings beat
MGM Resorts International (
) has an Earnings ESP of +41.67% and a Zacks Rank #3 (Hold).
Choice Hotels International Inc. (
) has an Earnings ESP of +2.04% and a Zacks Rank #2 (Buy).
Harman International Industries, Incorporated (
) has an Earnings ESP of +0.82% and a Zacks Rank #3.
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MGM RESORTS INT (MGM): Free Stock Analysis
HARMAN INTL IND (HAR): Free Stock Analysis
CHOICE HTL INTL (CHH): Free Stock Analysis
MELCO CROWN ENT (MPEL): Free Stock Analysis
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