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Leisure Stock Q3 Earnings Due on Nov 5: MAR, SEAS & HUD

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The leisure industry — which comprises companies providing recreational services such as swimming pools, golf courses, boats, outdoor spaces, cruises, travel etc. — primarily thrives on overall economic growth and consumer spending.

Steady rise in wages, lower unemployment and upbeat consumer confidence indicate that leisure stocks are poised to record handsome gains. This is because these stocks are part of a cyclical industry, where the demand for goods and services is relatively elastic and any significant change in the general market affects consumers’ preference.

What's in Store for the Leisure Space?

Per the advance estimate by the Bureau of Economic Analysis, gross domestic product (GDP) increased at an annualized rate of 3.5% in the third quarter compared with 4.2% growth in the second quarter.

While real GDP was backed by increased personal consumption expenditures (PCE), private inventory investment, state and local government spending, federal government spending, and non-residential fixed investment; it was slightly affected by a downturn in exports and deceleration in non-residential fixed investment.

Meanwhile, Federal Reserve raised its outlook on U.S. economic growth. Current-year economic growth is currently estimated to be 3.1%. This is likely to support the industry’s growth in 2018.

Concerns Remain

Despite an upbeat consumer spending scenario, a few concerns remain. The Consumer Discretionary Sector, encompassing all the leisure subindustries, has underperformed the S&P 500 over the past year. The sector has gained 4.2% in the past year compared with the S&P 500’s rally of 5.2%.


The tricky nature of discretionary spending has been weighing on the sector’s performance. Also, tariff concerns have been affecting the stocks in the leisure space of late.

Moreover, Trump’s stringent policies on immigration and tourist visas seem to have compelled international visitors to rethink their vacation plans to the United States. There has been a continued slowdown in U.S.-bound air travel bookings ever since Trump took charge. Also, online searches by prospective travelers to the United States have declined sharply.

We note that, so far this year, overall inflation and commodity price increases have been checked by a relatively stronger dollar. However, household wages, which have started to move up, have not significantly gone up to combat the expected inflationary pressure. This has put the leisure industry in a tricky position for quite some time now.

Q3 Expectations for Consumer Discretionary Sector

Like some other sectors, the widely diversified Consumer Discretionary sector (among 13 of the 16 Zacks categorized sectors) is likely to put up a decent show in third-quarter earnings.

Per the Earnings Preview report as of Oct 31, the sector’s aggregate third-quarter EPS is expected to increase 13.9% compared with 18.1% in the last reported quarter. Revenues are expected to increase 7.8%, slightly higher than 6.4% in the second quarter. Margins in the quarter under review are anticipated to expand 0.6% compared with the last reported quarter’s increase of 1.1%.

Stocks to Watch for Earnings Due on Nov 5

Marriott International, Inc. (MAR - Free Report) is scheduled to report third-quarter 2018 results. For the quarter under review, the consensus estimate is pegged at $1.31. It has remained unchanged over the past 30 days. This reflects gain of 19.1% from $1.10 registered in the year-ago quarter. Revenues are expected to be $5,374 million, down by more than 5% year over year.

Marriott’s top line in the third quarter is likely to be impacted by decline in revenues at owned, leased and other segment. However, base management, franchise and incentive management fees will continue to grow on a year-over-year basis. (Read more: Marriott to Report Q3 Earnings: What's in the Offing?)

Our proven model does not conclusively show that Marriott is likely to beat earnings estimates in the third 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Marriott has an Earnings ESP of -1.15% and a Zacks Rank #3, making surprise prediction difficult.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Marriott International Price and EPS Surprise

U.S. based theme park and entertainment company, SeaWorld Entertainment, Inc. is scheduled to report third-quarter 2018 results. The company currently sports a Zacks Rank #1 and has an Earnings ESP of +7.88% that suggests a likely beat in the to-be-reported quarter. SeaWorld surpassed the consensus estimate in two of the trailing four quarters, the average beat being 1.2%. For the quarter to be reported, earnings estimates are pegged at $1.11, projecting 73.4% growth from the year-ago quarter.

SeaWorld Entertainment, Inc. Price and EPS Surprise

Hudson Ltd. is slated to report third-quarter 2018 results. The company currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%, which makes surprise prediction difficult. Earnings for the to-be-reported quarter are estimated to be 30 cents per share.

Hudson Ltd. Price and EPS Surprise

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