Leisure Stocks' Q2 Earnings Due on Jul 25: HLT, LVS, STAY, SIX

Investors are keeping a close watch on second-quarter earnings season, which so far looks impressive. In fact, this reporting cycle is expected to be as good as the first quarter, wherein the S&P 500 companies witnessed highest quarterly earnings growth rate in more than seven years.

Per the latest Earnings Preview, out of the 87 S&P 500 companies that have come up with their financial numbers, 86.2% outpaced earnings estimates and 77% exceeded top-line expectations. Also, total earnings of these companies increased 20.9% from the same period last year on 10.3% higher revenues.

According to the report, total earnings for S&P 500 companies are expected to increase 21% year over year, with revenues likely to be up 8.3%. In the first quarter, the S&P 500 companies have witnessed earnings and revenues growth of 24.6% and 8.7%, respectively.

What’s in Store for Consumer Discretionary Sector?

Like some other high-flying sectors, the widely diversified Consumer Discretionary is likely to put up a stellar show in Q2. In fact, we believe that increased consumer spending have positioned the industry on a growth trajectory. The industry is expected to gain in the near term, especially on a steady rise in wages, lower unemployment and upbeat consumer confidence.

Total earnings for the sector are anticipated to increase 10.7% in Q2 compared with 14.7% in first-quarter 2018. Revenues are projected to grow 6.1%, flat sequentially. Margins are anticipated to increase 0.4% compared with a 0.9% gain in the last reported quarter. Notably, leisure stocks form part of the Consumer Discretionary sector.

Among the leisure stocks lined up to report on Jul 25, let’s take a look at four key picks from this sector.

Hilton Worldwide Holdings Inc. HLT is scheduled to report second-quarter 2018 numbers before market open. In the trailing four quarters, the company’s earnings have surpassed the Zacks Consensus Estimate by an average of 11.6%.

In the to-be-reported quarter, the company’s top and bottom line are expected to improve on a year-over-year basis. In fact, Hilton’s relentless expansion strategies coupled with an asset-light business model and a solid loyalty program put the company on growth trajectory amid a competitive industry. Moreover, management anticipates system-wide revenue per available room (ReVPAR) to increase 3-4% year over year on a comparable as well as currency-neutral basis. The company also expects management and franchise fee revenues to increase in the band of 7-9% year over year.

Additionally, Hilton is consistently focusing on unit growth in a bid to maintain its position as the fastest-growing global hospitality company. In 2017, the company witnessed net unit growth of 51,600 rooms. Hilton too expanded its footprint across new countries, totaling 105 countries and territories. For 2018, it projects an approximate 6.5% net unit growth. These apart, the company continues to have more rooms under construction in Europe, the Middle East and Asia Pacific compared with any other hotel chain. In line with this, Curio Collection has launched a hotel in Lynchburg, VA. The Zacks Consensus Estimate for second-quarter earnings is pegged at 70 cents, mirroring a year-over-year increase of 34.6%. Meanwhile, the same for revenues is $2,451 million, which reflects a gain of 4.5% from the year-ago quarter.

Hilton has an Earnings ESP of +0.43% and a Zacks Rank #2 (Buy), a combination that increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. (Read More: What's in Store for Hilton This Earnings Season?)

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise

Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise | Hilton Worldwide Holdings Inc. Quote

Las Vegas Sands Corp. LVS is slated to release second-quarter 2018 financial numbers after market close. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 20.9%.

Las Vegas Sands began 2018 on a positive note with both top and bottom line surpassing the consensus mark for the fifth straight quarter when it reported first-quarter 2018 results. This momentum is likely to continue in the quarter to be reported as well. Robust performance by the company’s The Venetian Macao and Sands Cotai Central segments is likely to drive results in Q2. Per the Zacks Consensus Estimate, The Venetian Macao and Sands Cotai Central segments are expected to witness revenue growth of 19.1% and 13.5%, respectively.

However, the company’s Sands Macao segment has been reporting dismal performance since the last few quarters. This downtrend is expected to continue in this earnings season as well. The Zacks Consensus Estimate for the segment’s second-quarter revenues is pegged at $156 million, down 3.1% year over year. For Las Vegas operations, the consensus estimate for the same is pegged at $423 million, reflecting a decline of 10.2% year over year.

Las Vegas Sands has an Earnings ESP of +3.05% and a Zacks Rank #3 (Hold), a combination that increases the odds of an earnings beat. (Read More: Is a Beat in Store for Las Vegas Sands in Q2 Earnings?)

Las Vegas Sands Corp. Price, Consensus and EPS Surprise

Las Vegas Sands Corp. Price, Consensus and EPS Surprise | Las Vegas Sands Corp. Quote

Extended Stay America, Inc. STAY is scheduled to report second-quarter 2018 results on after market close. In the first quarter, the company’s earnings have surpassed the Zacks Consensus Estimate by 11.8%.

Extended Stay’s operating model proposes a low-cost capital structure that has low fixed and variable costs. Even though an ongoing increase in wages can substantially put pressure on the company’s expenses, its cost-saving measures are expected to have boosted earnings in the to-be-reported quarter. In the last reported quarter, the company’s earnings increased 33.5% year over year, partially backed by lower depreciation as well as interest expenses, and the trend is likely to have continued in the current reporting cycle as well. Subsequently, the consensus estimate pegs the quarter’s earnings at 34 cents, predicting a 9.7% increase from the prior-year quarter.

Extended Stay’s efforts to drive its ReVPAR by providing suitable services to value-conscious business travelers are encouraging as well. For Q2 and 2018, The company anticipates comparable system-wide RevPAR growth in the range of 1-3% each. The consensus estimate projects second-quarter RevPAR growth of 1.9% from the year-ago quarter. RevPAR growth is expected to rise on a projected 3% increase in ADR.

Extended Stay has an Earnings ESP of +3.38% and a Zacks Rank #2, a combination that increases the odds of an earnings beat. (Read More: Can Cost-Cut Efforts Favor Extended Stay Q2 Earnings?)

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

Extended Stay America, Inc. Price, Consensus and EPS Surprise

Extended Stay America, Inc. Price, Consensus and EPS Surprise | Extended Stay America, Inc. Quote

Six Flags Entertainment Corporation SIX, a prominent owner and operator of regional parks, is scheduled to report second-quarter numbers after market close.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $437.8 million, reflecting 3.7% growth from the year-ago actual figure. Moreover, the same for earnings is 93 cents per share, reflecting a gain of 57.6%. Six Flags has an Earnings ESP of +3.50% and a Zacks Rank #3, a combination that increases the odds of an earnings beat.

Six Flags Entertainment Corporation New Price, Consensus and EPS Surprise

Six Flags Entertainment Corporation New Price, Consensus and EPS Surprise | Six Flags Entertainment Corporation New Quote

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