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Melco Crown (MPEL) to Report Q4 Earnings: What's in Store?

Melco Crown Entertainment LimitedMPEL is scheduled to report fourth-quarter and full-year 2016 numbers on Feb 16, before the opening bell.

Last quarter, Melco Crown posted a massive 225% 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 102.92%.

Melco Crown Entertainment Limited Price and EPS Surprise

Melco Crown Entertainment Limited Price and EPS Surprise | Melco Crown Entertainment Limited Quote

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

Factors to Consider

Melco Crown's revenues have been hurt by its sluggish performance in Macau over the past few quarters. Nevertheless, per the Macau Gaming Inspection and Coordination Bureau, gross gaming revenues (GGR) rose in all the three months of the quarter, thereby continuing the revival in Macau. We thus expect the company's performance in the region to get a boost in the to-be-reported quarter.

Conversely, the results may be somewhat be hampered by the anti-graft corruption drive undertaken by the Chinese government, which is still keeping VIP gamblers at bay.

Meanwhile, better performance at the non-gaming segments like rooms and food and beverages are expected to further drive the quarter's results. The company's large-scale resorts also provide distinctive lodging, entertainment and retail options, which appeals to a broader audience from around the region. Additionally, the company's cost-control efforts including effective management of marketing expenses are likely to boost fourth-quarter profits and margins.

Further, the addition of new VIP tables at the company's Studio City property is set to deliver a broader product offering to a wider breadth of customers, which in turn is expected to drive increased profitability.

The management also expects Philippines' gaming industry to be supported by the country's robust economic growth and its expanding inbound tourism strategy. Thus, Melco's Entertainment City property therein might largely benefit from this growth.

Earnings Whispers

Our proven model does not conclusively show that Melco Crown is likely to beat earnings 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. That is not the case here, as you will see below.

Zacks ESP: Melco Crown has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 10 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Melco Crown currently sports a Zacks Rank #1. However, the ESP of 0.00% makes surprise prediction difficult.

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

Stocks to Consider

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

Extended Stay America, Inc. STAY has an Earnings ESP of +21.43% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

MGM Resorts International MGM has an Earnings ESP of +11.76% and carries a Zacks Rank #2.

Pinnacle Entertainment, Inc. PNK has an Earnings ESP of +57.14% and a Zacks Rank #3.

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MGM Resorts International (MGM): Free Stock Analysis Report

Pinnacle Entertainment, Inc. (PNK): Free Stock Analysis Report

Melco Crown Entertainment Limited (MPEL): Free Stock Analysis Report

Extended Stay America, Inc. (STAY): 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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