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Extended Stay (STAY) Q4 Earnings: Is a Surprise in Store?
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Extended Stay America, Inc. is scheduled to report fourth-quarter and full-year 2016 results on Feb 28, before the opening bell. We expect the company to surpass expectations.
Last quarter, Extended Stay posted a positive earnings surprise of 5.88%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 8.02%.
Extended Stay America, Inc. Price and EPS Surprise
Our proven model shows that Extended Stay is likely to beat on earnings because it has the perfect combination of the two key ingredients.
Zacks ESP: Earnings ESP for Extended Stay is +21.43% because the Most Accurate estimate stands at 17 cents, while the Zacks Consensus Estimate is pegged at 14 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Extended Stay currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Extended Stay’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat.
What Drives the Better-than-Expected Earnings?
Extended Stay has been renovating its properties lately, which has hurt its occupancy rates in the recent quarters. However, the trend is expected to better in the fourth quarter as the company has renovated over 90% of its rooms. Yet, the costs related to the same could continue to hurt profits.
Again, the company’s lack of exposure to the emerging markets might limit its revenue growth potential in the fourth quarter. That said, the same reason limits the company’s exposure to volatile oil markets, unfavorable currency impact and competition, which should boost results.
Meanwhile, the transformational initiatives undertaken by Extended Stay should continue to aid RevPAR as hotels that have already been renovated are witnessing increases in Average Daily Rate (ADR) and occupancy levels. Moreover, various sales and marketing initiatives, and limited exposure to inbound international travel are likely to drive the top line. Also, the company expects its expense containment and cost savings measures to support the growth of favorable margins.
The company provided specific fourth-quarter guidance with its Q3 earnings release. Therein, it expects total revenue of $286 million to $292 million, which represents growth of approximately 1–3% over Comparable Hotel revenue in the fourth quarter of 2015. Additionally, the company anticipates adjusted Earnings before Interest, Tax, Depreciation & Amortization (EBITDA) of $128 million to $133 million during the quarter representing 4.6% to 8.7% adjusted EBITDA growth on a Comparable Hotel basis.
Stocks to Consider
Extended Stay is not the only company looking up this earnings season. Here are some other companies in the broader consumer discretionary sector to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:
Peak Resorts, Inc. has an Earnings ESP of +3.51% and a Zacks Rank #3.
Red Rock Resorts, Inc. (RRR - Free Report) has an Earnings ESP of +3.03% and has a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Extended Stay (STAY) Q4 Earnings: Is a Surprise in Store?
Extended Stay America, Inc. is scheduled to report fourth-quarter and full-year 2016 results on Feb 28, before the opening bell. We expect the company to surpass expectations.
Last quarter, Extended Stay posted a positive earnings surprise of 5.88%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 8.02%.
Extended Stay America, Inc. Price and EPS Surprise
Extended Stay America, Inc. Price and EPS Surprise | Extended Stay America, Inc. Quote
Why a Likely Positive Surprise?
Our proven model shows that Extended Stay is likely to beat on earnings because it has the perfect combination of the two key ingredients.
Zacks ESP: Earnings ESP for Extended Stay is +21.43% because the Most Accurate estimate stands at 17 cents, while the Zacks Consensus Estimate is pegged at 14 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Extended Stay currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.
Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Extended Stay’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat.
What Drives the Better-than-Expected Earnings?
Extended Stay has been renovating its properties lately, which has hurt its occupancy rates in the recent quarters. However, the trend is expected to better in the fourth quarter as the company has renovated over 90% of its rooms. Yet, the costs related to the same could continue to hurt profits.
Again, the company’s lack of exposure to the emerging markets might limit its revenue growth potential in the fourth quarter. That said, the same reason limits the company’s exposure to volatile oil markets, unfavorable currency impact and competition, which should boost results.
Meanwhile, the transformational initiatives undertaken by Extended Stay should continue to aid RevPAR as hotels that have already been renovated are witnessing increases in Average Daily Rate (ADR) and occupancy levels. Moreover, various sales and marketing initiatives, and limited exposure to inbound international travel are likely to drive the top line. Also, the company expects its expense containment and cost savings measures to support the growth of favorable margins.
The company provided specific fourth-quarter guidance with its Q3 earnings release. Therein, it expects total revenue of $286 million to $292 million, which represents growth of approximately 1–3% over Comparable Hotel revenue in the fourth quarter of 2015. Additionally, the company anticipates adjusted Earnings before Interest, Tax, Depreciation & Amortization (EBITDA) of $128 million to $133 million during the quarter representing 4.6% to 8.7% adjusted EBITDA growth on a Comparable Hotel basis.
Stocks to Consider
Extended Stay is not the only company looking up this earnings season. Here are some other companies in the broader consumer discretionary sector to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:
Tribune Media Company has an Earnings ESP of +4.44% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peak Resorts, Inc. has an Earnings ESP of +3.51% and a Zacks Rank #3.
Red Rock Resorts, Inc. (RRR - Free Report) has an Earnings ESP of +3.03% and has a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>