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4 Leisure Stocks Set to Beat Estimates This Earnings Season

Harendra Ray

The leisure industry is widely diversified in nature and primarily thrives on overall economic growth and consumer spending. It comprises companies that provide recreational products and services such as swimming pools, golf courses, boats, outdoor spaces, cruises and travel to name a few. Notably, demand for such services is relatively elastic.

Most of the leisure stocks are likely to have benefited from steady rise in wages, lower unemployment and upbeat consumer confidence. Apart from higher personal expenditure, increased demand for leisure products and services is driving the leisure industry. Since Dec 31, 2019, the Zacks Consensus Estimate for leisure product and services has rallied 15.8% and 2.9%, respectively.

Furthermore, the boating market is also witnessing robust demand and the trend is likely to continue in the near term. According to National Marine Manufacturers Association, the boat manufacturers are continuously increasing production to support high demand. Demand for powerboats, including small sterndrive, wakeboard boats and smaller fiberglass boats with jet technology, is rapidly rising.

The leisure industry has been weighed down by high cost burden. The companies within the space generally work through multiple business models. Moreover, since most leisure and recreation service companies rely heavily on debt-financing owing to the capital-intensive nature of their businesses, the rising interest rate environment does not bode well.

How to Make the Right Pick?

Based on the abovementioned positives, it would be a good idea to add leisure stocks with the potential of reporting better-than-expected earnings in fourth-quarter 2019 to one’s portfolio.

Nonetheless, given the wide range of companies in this space, the task is by no means easy. While it is impossible to be sure of the outperformers, our proprietary methodology — a positive Earnings ESP along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — makes it relatively simple. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

Our Choices

Here are a few leisure companies that investors can take a look at.

Acushnet Holdings Corp. GOLF will report fourth-quarter 2019 results. The company has a Zacks Rank #2 and an Earnings ESP of +23.76%. Moreover, the consensus estimate for earnings is pegged at 23 cents, indicating an improvement of 53.3% growth from the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Acushnet Holdings Corp. Price and EPS Surprise

 

Acushnet Holdings Corp. Price and EPS Surprise

Acushnet Holdings Corp. price-eps-surprise | Acushnet Holdings Corp. Quote

SeaWorld Entertainment, Inc. SEAS will report fourth-quarter 2019 results. It has an Earnings ESP of +104.17% and a Zacks Rank #3. Also, earnings estimate for the quarter is pegged at 2 cents, suggesting growth of 200% from the prior-year quarter.

SeaWorld Entertainment, Inc. Price and EPS Surprise

 

SeaWorld Entertainment, Inc. Price and EPS Surprise

SeaWorld Entertainment, Inc. price-eps-surprise | SeaWorld Entertainment, Inc. Quote

Royal Caribbean Cruises Ltd. RCL will report fourth-quarter 2019 results. The company has an Earnings ESP of +0.71% and a Zacks Rank #3. The Zacks Consensus Estimate for the company’s earnings in the quarter to be reported is pegged at $1.41, indicating a decline of 7.8% from the year-ago quarter’s reported figure. Meanwhile, Trump administration's policy change on travel to Cuba remains a concern. Royal Caribbean estimates that the financial impact of this regulatory change is likely to hurt 2019 earnings in the range of 25 cents to 35 cents per share.

Royal Caribbean Cruises Ltd. Price and EPS Surprise

 

Royal Caribbean Cruises Ltd. Price and EPS Surprise

Royal Caribbean Cruises Ltd. price-eps-surprise | Royal Caribbean Cruises Ltd. Quote

Lindblad Expeditions Holdings, Inc. LIND will report fourth-quarter 2019 results. The company has an Earnings ESP of +157.14% and a Zacks Rank #3. The Zacks Consensus Estimate for the fourth quarter is pegged at a loss of 4 cents, narrower than the prior-year reported figure of loss of 10 cents.

Lindblad Expeditions Holdings Inc. Price and EPS Surprise

 

Lindblad Expeditions Holdings Inc. Price and EPS Surprise

Lindblad Expeditions Holdings Inc. price-eps-surprise | Lindblad Expeditions Holdings Inc. Quote

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Acushnet Holdings Corp. (GOLF) : Free Stock Analysis Report
 
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