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What's in the Cards for SeaWorld (SEAS) in Q4 Earnings?

Zacks Equity Research
Updated

SeaWorld Entertainment, Inc. SEAS is scheduled to report fourth-quarter 2017 numbers on Feb 27, before the opening bell.

Last quarter, the company posted a negative earnings surprise of 17.95%. SeaWorld surpassed expectations in only one of the last four quarters, the average being a positive 38.39% owing to a strong second-quarter 2017 beat.

Let’s discuss the factors that are likely to influence the company’s fourth-quarter 2017 results.

Historically, the first and the fourth quarters of each year are seasonally weak for SeaWorld. During the first nine months of 2017, the company’s revenues declined 7% from the prior-year period. The trend is expected to persist in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is pegged at $260.7 million, implying a 2.6% decline from the year-ago quarter. Additionally, costs related to marketing and reputation campaigns as well as investments in new attractions might hurt profits. Per the Zacks Consensus Estimate, the company is anticipated to report a loss of 18 cents, showing a deterioration of 28.6% year over year.

Moreover, SeaWorld’s total revenue per capita has been under pressure primarily due to lower attendance. Attendance in the first nine months of 2017 declined approximately 1.1 million guests, thanks to lower domestic and international attendance. The trend is expected to continue in the to-be-reported quarter.

Nevertheless, we are optimistic about the company’s sincere efforts to control costs without denting efficiency and improve financial standing through debt refinancing. These factors are expected to drive upcoming results to some extent.

Quantitative Model Prediction

Our quantitative model predicts that SeaWorld does not have the right combination of two main ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — needed for increasing the odds of an earnings beat.
 
Zacks ESP: SeaWorld has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: SeaWorld carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 revisions.

SeaWorld Entertainment, Inc. Price and EPS Surprise

 

SeaWorld Entertainment, Inc. Price and EPS Surprise | SeaWorld Entertainment, Inc. Quote

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Stocks to Consider

Here are a few stocks from the Consumer Discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Carnival Corporation CCL has an Earnings ESP of +2.38% and a Zacks Rank #3. The company is expected to report quarterly numbers on Mar 27.

Discovery Communications, Inc. DISCA has an Earnings ESP of +4.70% and a Zacks Rank #3. The company is scheduled to report quarterly results on Feb 27.

Red Rock Resorts, Inc. RRR has an Earnings ESP of +9.38% and a Zacks Rank #3. The company is expected to report quarterly numbers on Mar 6.

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Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
 
Carnival Corporation (CCL) : Free Stock Analysis Report
 
SeaWorld Entertainment, Inc. (SEAS) : Free Stock Analysis Report
 
Discovery Communications, Inc. (DISCA) : Free Stock Analysis Report
 
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Zacks Investment Research