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There Is No Relaxing These Leisure Stocks Come Q4 Earnings

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There are a number of factors driving consumer demand for leisure services. These include the evolution of a global marketplace, rising customer confidence, leap-and-bound improvement in technology, expanded use of social media and mobile, and extensive retail development. The global economic recovery from yesterday’s ashes will further invigorate demand for non-discretionary services including entertainment, recreation and tourism.  
Rising disposable incomes in the West and an emerging middle class desiring additional conveniences in the developing world are expected to continue to support revenue growth in the coming years.
Given the widespread optimism, it might be a good idea to bet on a handful of leisure services stocks that are poised to beat earnings estimates this quarter.
How to Make a Choice?
Picking the right stock for your portfolio could appear to be a daunting task amid a wide range of companies in the leisure services space. One way to confine the list of choices during this earnings season is by looking at stocks that have a solid Zacks Rank accompanied by a favorable Zacks Earnings ESP.
Earnings ESP is our proprietary methodology for determining which stocks have the best chance to surprise investors in their next earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Consensus.
The combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP is usually an indication of an earnings beat. Our research shows that for stocks with this combination, the chance of positive earnings surprise is as high as 70%.
Here are three leisure services stocks that are scheduled to release earnings this week and match these criteria.
Melco Crown Entertainment Limited
Headquartered in Central, Hong Kong, Melco operates casino gaming and entertainment resort facilities in Macau, one of the largest gaming destinations in the world. The firm operates two casino hotels, with over 500 gaming tables, hundreds of hotel beds, and thousands of gaming machines in this important gaming market. With the recovery in the Chinese gaming market and plans for expansion in Japan and the Philippines, the company has bright prospects ahead.  
The company presently carries a Zacks Rank #1 (Strong Buy) and has an earnings ESP of +6.45%. Melco is set to report its third quarter results on Nov 5, before the opening bell.
Cinemark Holdings Inc. (CNK - Free Report)
Headquartered in Plano, Texas, Cinemark is a motion picture exhibitor, operating 504 theaters with 5,794 screens across the U.S. as well as in Brazil, Mexico, Argentina and many other Latin American countries.
Increasing movie attendance, rising ticket prices, international momentum, robust growth projections and a decent dividend yield make this Zacks Rank #3 (Hold) stock attractive. Cinemark also has an earnings ESP +3.64%. The company is expected to report its third quarter 2013 results before the market opens on Nov 7.
International Game Technology (IGT - Free Report)
Based in Las Vegas, Nev., International Game Technology has been a leader in the casino gaming segment. The global gaming company designs and manufactures electronic gaming equipment and systems especially for casino management like casino-style games, casino-style slot machines, wide area progressive jackpot systems and many more.
An improving domestic gaming environment, international expansion opportunities, an impressive product portfolio, strong performance from the interactive business and cost-cutting initiatives are expected to drive growth for the company. The company currently has a Zacks Rank #3 along with an earnings ESP of +2.94%. The company is expected to report its fourth quarter and fiscal year 2013 results before the opening bell on Nov 7.
Bottom Line
Leisure companies are constantly faced with the challenge of identifying and meeting evolving customer needs. Some of the companies discussed above have found innovative ways to make use of emerging social/mobile applications. Competition is also rife in this niche thereby compelling leisure service companies to resort to solid marketing campaigns and startling innovations.
So, the question no longer is whether or not to choose leisure services stocks. In this entertainment hungry world, the critical question is to choose the right leisure services stocks before they release earnings. However, investors should note that the sector is highly vulnerable to changes in broader economic conditions and political vagaries.
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