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Zacks Industry Outlook Highlights Live Nation Entertainment, AMC Entertainment Holdings and RCI Hospitality Holdings
Read MoreHide Full Article
For Immediate Release
Chicago, IL – October 28, 2022 – Today, Zacks Equity Research discusses Live Nation Entertainment, Inc. (LYV - Free Report) , AMC Entertainment Holdings, Inc. (AMC - Free Report) and RCI Hospitality Holdings, Inc. (RICK - Free Report) .
The Zacks Leisure and Recreation Services industry has been bearing the brunt of high costs and the slowing U.S. economy. However, the optimization of business processes, consistent strategic partnerships and digital initiatives bode well. Industry players like Live Nation Entertainment, Inc., AMC Entertainment Holdings, Inc. and RCI Hospitality Holdings, Inc. are likely to gain in their respective fields owing to the aforementioned factors.
Industry Description
The Zacks Leisure and Recreation Services industry comprises a wide range of recreation providers, such as cruise, entertainment and media owners, golf-related leisure and entertainment venue business, theme park makers, resort operators and event organizers. Some of the industry players have ski and sports businesses, while some operate health and wellness centers onboard cruise ships and at destination resorts.
Some of the companies are engaged in hospitality and related businesses. A few of the industry participants also provide weight management products and services. These companies primarily thrive on overall economic growth, which fuels consumer demand for products. Demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Future of the Leisure & Recreation Services Industry
Slowing US Economy Remains a Concern: A slowdown in the economy is likely to hurt the industry. Worries about a global slowdown and a possible recession loom large over the stock market. Market pundits fear that the Federal Reserve's hawkish stance to tame inflation might push the economy into a recession. A high inflation rate continues to hurt the industry. Despite some moderation from a 40-year high level, inflation in the United States is proving to be much more stubborn than expected.
According to the last released Consumer Price Index (CPI) numbers for September, the figure stood at 8.2%. Although inflation declined for the third straight month, it is still very high. Inflationary cost increases in the areas of labor, compensation, healthcare, freight and rent are leading to higher expenses.
Cruise Operators Recovery Continues: The cruise industry has been severely impacted by the coronavirus pandemic. However, cruise operators are slowly recovering, backed by the resumption of services. However, the closure of cruise operations in China is hurting the industry. The cruise operators' operations are likely to be influenced by the uncertainty related to the Russian invasion of Ukraine. Also, geopolitical developments have pushed fuel curves higher. Due to the war, most cruise operators have decided to withdraw all activity in Russia. Cash burn is hurting the companies.
Theme Park Operators & Live Entertainment Companies Bouncing Back: The theme park industry, which was rattled by the coronavirus pandemic, has been benefiting from the reopening of parks. Theme park operators have been gaining from improving visitation. Consumer spending at theme parks has been rising. Meanwhile, live entertainment firms have been benefiting from pent-up demand for live events and robust ticket sales.
Zacks Industry Rank Indicates Dismal Prospects
The Zacks Leisure and Recreation Services industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #128, which places it in the bottom 49% of 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the bottom 50% of the Zacks-ranked industries is the result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in the group's earnings growth potential. Since Mar 31, 2022, the industry's loss estimates for the current year have moved south by 196%.
Before we present a few stocks that investors can take a look at, let's analyze the industry's recent stock-market performance and valuation picture.
Industry Underperforms the S&P 500
The Zacks Leisure and Recreation Services industry has underperformed the Zacks S&P 500 composite and its sector over the past year. Stocks in the industry have collectively declined 45.4% in the past year compared with the broader sector's decline of 42.3%. The S&P 500 has decreased 17.2% in the said time frame.
Valuation
On the basis of the forward 12-month EV/EBITDA (Enterprise Value/Earnings before Interest Tax Depreciation and Amortization), which is a commonly used multiple for valuing debt-laden leisure service stocks, the industry trades at 11.53X compared with the S&P 500's 9.76X and the sector's 7.92X. Over the past five years, the industry has traded as high as 191.34X and as low as 5.55X, with the median being 10.54X.
3 Leisure and Recreation Services Stocks Worth Betting On
Live Nation Entertainment: Headquartered in Beverly Hills, CA, Live Nation Entertainment operates as a live entertainment company. The company has been benefiting from pent-up demand for live events and robust ticket sales. This, along with increased demand for digital ticketing and contactless transactions, is likely to contribute to an upside.
Shares of this Zacks Rank #1 (Strong Buy) company have declined 21.8% in the past year. In the past 30 days, earnings estimates for 2022 have been revised upward by 32.5% to 53 cents. You can see the complete list of today's Zacks #1 Rank stocks here.
RCI Hospitality Holdings: Based in Houston, TX, the company operates through Nightclubs, Bombshells and Other segments. The company has been gaining from the robust performance of bombshells and nightclubs.
Shares of this Zacks Rank #1 company have declined 16.2% in the past year. The company's earnings for fiscal 2022 are likely to increase 20.9%. In the past 30 days, earnings estimates for 2022 have been revised upward by 2.3% to $5.27.
AMC Entertainment: Headquartered in Leawood, KS, the company engages in the theatrical exhibition business. The company is benefiting from an increase in global attendance. AMC Entertainment is making comprehensive health and sanitation programs, which include enhanced cleaning procedures and upgraded air filtration efforts, to ensure maximum safety for guests.
Shares of this Zacks Rank #2 (Buy) company have declined 81.2% in the past year. In the past 30 days, loss estimates for the company have narrowed to 95 cents from $1.39 per share.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Live Nation Entertainment, AMC Entertainment Holdings and RCI Hospitality Holdings
For Immediate Release
Chicago, IL – October 28, 2022 – Today, Zacks Equity Research discusses Live Nation Entertainment, Inc. (LYV - Free Report) , AMC Entertainment Holdings, Inc. (AMC - Free Report) and RCI Hospitality Holdings, Inc. (RICK - Free Report) .
Industry: Leisure & Recreation
Link: https://www.zacks.com/commentary/1998489/3-leisure-recreation-services-stocks-braving-industry-challenges
The Zacks Leisure and Recreation Services industry has been bearing the brunt of high costs and the slowing U.S. economy. However, the optimization of business processes, consistent strategic partnerships and digital initiatives bode well. Industry players like Live Nation Entertainment, Inc., AMC Entertainment Holdings, Inc. and RCI Hospitality Holdings, Inc. are likely to gain in their respective fields owing to the aforementioned factors.
Industry Description
The Zacks Leisure and Recreation Services industry comprises a wide range of recreation providers, such as cruise, entertainment and media owners, golf-related leisure and entertainment venue business, theme park makers, resort operators and event organizers. Some of the industry players have ski and sports businesses, while some operate health and wellness centers onboard cruise ships and at destination resorts.
Some of the companies are engaged in hospitality and related businesses. A few of the industry participants also provide weight management products and services. These companies primarily thrive on overall economic growth, which fuels consumer demand for products. Demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Future of the Leisure & Recreation Services Industry
Slowing US Economy Remains a Concern: A slowdown in the economy is likely to hurt the industry. Worries about a global slowdown and a possible recession loom large over the stock market. Market pundits fear that the Federal Reserve's hawkish stance to tame inflation might push the economy into a recession. A high inflation rate continues to hurt the industry. Despite some moderation from a 40-year high level, inflation in the United States is proving to be much more stubborn than expected.
According to the last released Consumer Price Index (CPI) numbers for September, the figure stood at 8.2%. Although inflation declined for the third straight month, it is still very high. Inflationary cost increases in the areas of labor, compensation, healthcare, freight and rent are leading to higher expenses.
Cruise Operators Recovery Continues: The cruise industry has been severely impacted by the coronavirus pandemic. However, cruise operators are slowly recovering, backed by the resumption of services. However, the closure of cruise operations in China is hurting the industry. The cruise operators' operations are likely to be influenced by the uncertainty related to the Russian invasion of Ukraine. Also, geopolitical developments have pushed fuel curves higher. Due to the war, most cruise operators have decided to withdraw all activity in Russia. Cash burn is hurting the companies.
Theme Park Operators & Live Entertainment Companies Bouncing Back: The theme park industry, which was rattled by the coronavirus pandemic, has been benefiting from the reopening of parks. Theme park operators have been gaining from improving visitation. Consumer spending at theme parks has been rising. Meanwhile, live entertainment firms have been benefiting from pent-up demand for live events and robust ticket sales.
Zacks Industry Rank Indicates Dismal Prospects
The Zacks Leisure and Recreation Services industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #128, which places it in the bottom 49% of 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the bottom 50% of the Zacks-ranked industries is the result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in the group's earnings growth potential. Since Mar 31, 2022, the industry's loss estimates for the current year have moved south by 196%.
Before we present a few stocks that investors can take a look at, let's analyze the industry's recent stock-market performance and valuation picture.
Industry Underperforms the S&P 500
The Zacks Leisure and Recreation Services industry has underperformed the Zacks S&P 500 composite and its sector over the past year. Stocks in the industry have collectively declined 45.4% in the past year compared with the broader sector's decline of 42.3%. The S&P 500 has decreased 17.2% in the said time frame.
Valuation
On the basis of the forward 12-month EV/EBITDA (Enterprise Value/Earnings before Interest Tax Depreciation and Amortization), which is a commonly used multiple for valuing debt-laden leisure service stocks, the industry trades at 11.53X compared with the S&P 500's 9.76X and the sector's 7.92X. Over the past five years, the industry has traded as high as 191.34X and as low as 5.55X, with the median being 10.54X.
3 Leisure and Recreation Services Stocks Worth Betting On
Live Nation Entertainment: Headquartered in Beverly Hills, CA, Live Nation Entertainment operates as a live entertainment company. The company has been benefiting from pent-up demand for live events and robust ticket sales. This, along with increased demand for digital ticketing and contactless transactions, is likely to contribute to an upside.
Shares of this Zacks Rank #1 (Strong Buy) company have declined 21.8% in the past year. In the past 30 days, earnings estimates for 2022 have been revised upward by 32.5% to 53 cents. You can see the complete list of today's Zacks #1 Rank stocks here.
RCI Hospitality Holdings: Based in Houston, TX, the company operates through Nightclubs, Bombshells and Other segments. The company has been gaining from the robust performance of bombshells and nightclubs.
Shares of this Zacks Rank #1 company have declined 16.2% in the past year. The company's earnings for fiscal 2022 are likely to increase 20.9%. In the past 30 days, earnings estimates for 2022 have been revised upward by 2.3% to $5.27.
AMC Entertainment: Headquartered in Leawood, KS, the company engages in the theatrical exhibition business. The company is benefiting from an increase in global attendance. AMC Entertainment is making comprehensive health and sanitation programs, which include enhanced cleaning procedures and upgraded air filtration efforts, to ensure maximum safety for guests.
Shares of this Zacks Rank #2 (Buy) company have declined 81.2% in the past year. In the past 30 days, loss estimates for the company have narrowed to 95 cents from $1.39 per share.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.