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Can Melco Crown (MPEL) Pull a Surprise in Q3 Earnings?

Melco Crown Entertainment LimitedMPEL is scheduled to report third-quarter 2016 numbers on Nov 3, before the opening bell.

Last quarter, Melco Crown posted a 66.67% positive earnings surprise. In fact, the company's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 49.17%.

Let's see how things are shaping up for this announcement.

MELCO CROWN ENT Price and EPS Surprise

MELCO CROWN ENT Price and EPS Surprise | MELCO CROWN ENT Quote

Factors Likely to Influence this Quarter

Melco Crown's revenues have been hurt by its sluggish performance in Macau over the past few quarters. However, per the Macau Gaming Inspection and Coordination Bureau, gross gaming revenues (GGR) for the month of July fell 4.5%, but rose in August and September by 1.1% and 7.4%, respectively, on a year-over-year basis, indicating that the Macau market might be on the recovery path. We thus expect the company's performance in the region to get a boost in the to-be-reported quarter.

Meanwhile, better performance at the non-gaming segments like rooms and food and beverages should further drive the quarter's results. Also, the company's cost-control efforts including effective management of marketing expenses are likely to boost third-quarter profits and margins.

Earnings Whispers

Our proven model does not conclusively show that Melco Crown is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP : Melco Crown has an Earnings ESP of -75.00%. This is because the Most Accurate estimate stands at 1 cent per share while the Zacks Consensus Estimate is pegged at 4 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank : Melco Crown has a Zacks Rank #3 which increases the predictive power of ESP. However, the company's negative ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Vail Resorts Inc. MTN has an Earnings ESP of +4.46% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Marriott International, Inc. MAR has an Earnings ESP of +4.44% and a Zacks Rank #3.

Time Warner Inc. TWX has an Earnings ESP of +0.74% and a Zacks Rank #3.

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MELCO CROWN ENT (MPEL): Free Stock Analysis Report

TIME WARNER INC (TWX): Free Stock Analysis Report

MARRIOTT INTL-A (MAR): Free Stock Analysis Report

VAIL RESORTS (MTN): Free Stock Analysis Report

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


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

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