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What's in the Cards for Live Nation (LYV) in Q2 Earnings?

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Live Nation Entertainment, Inc. (LYV - Free Report) is scheduled to report second-quarter 2017 results on Aug 9, after the market closes.

Last quarter, Live Nation’s loss was narrower than expected, leading to positive earnings surprise of 33.33%. In fact, the company has beaten/met estimates in each of the trailing four quarters, recording an average positive surprise of 30.28%.

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

Live Nation Entertainment, Inc. Price and EPS Surprise


Factors at Play

Live Nation has historically operated through four segments – Concerts, Ticketing, Artist Nation, and Sponsorship & Advertising. But from 2017, the company is reporting only under three business segments, by combining its Concerts and Artist Nation segments into one.

Over the last few quarters, all these segments, especially the Concerts segment, have been witnessing revenue growth backed by higher tickets sales. We expect this trend to have continued in the to-be-reported quarter as well.

Additionally, various digital initiatives undertaken by the company are likely to improve the ticket booking experience and further drive the top line. In fact, increased on-spite spending, including the addition of more points of sale as well as continuous refinement of its product assortment and pricing is also expected to boost concert business profitability.

Furthermore, Live Nation's ticketing business operates under the well-known brand, Ticketmaster, which has been posting solid revenues for the last few quarters. The company also boasts a significant presence in this high-margin agency business where it charges a fee for selling tickets on behalf of its clients. Thus, we expect the momentum of revenue growth to continue in the Ticketing segment.

Notably, in the first quarter conference call, management noted that second-quarter 2017 seemed to be particularly strong for both show count and attendance, owing to the robust line-up of arena and stadium shows as well as the timing of major festivals.

However, unfavorable foreign currency translations and sluggishness in the overall macro environment might dent the top line. Per management, forex had an adverse impact of 1%-2% on the company’s business in the last reported quarter, and the same is expected to mar second quarter results as well.

Earnings Whispers

Our proven model does not conclusively show earnings beat for Live Nation 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, which is not the case here, as you will see below.

Zacks ESP: Live Nation has an Earnings ESP of -10.00%. This is because the Most Accurate estimate is 18 cents per share, while the Zacks Consensus Estimate is pegged at 20 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

:Zacks Rank: Live Nation has a Zacks Rank #2, which increases the predictive power of ESP. But its negative ESP makes surprise prediction difficult.

Note that 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 revision.

Stocks to Consider

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

Alibaba Group Holding Limited (BABA - Free Report) has an Earnings ESP of +4.11% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Camping World Holdings, Inc. (CWH - Free Report) has an Earnings ESP of +5.80% and a Zacks Rank #3.

Coach, Inc. has an Earnings ESP of +2.08% and a Zacks Rank #3.

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