What To Expect From Live Nation (LYV) This Earnings Season?

Live Nation Entertainment, Inc. (NYSE:LYV) is scheduled to report fourth-quarter 2017 results on Feb 27, after market close. Last quarter, the company reported a negative earnings surprise of 3.64%. Live Nation surpassed/met expectations in three of the last four quarters, the average beat being a positive 20.58% owing to a strong second-quarter 2017 beat.

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

All segments (Concerts, Advertising and Ticketing), especially the Concerts segment, have been witnessing revenue growth backed by higher ticket sales over the last few quarters. We expect this trend to have continued in the to-be-reported quarter as well.

Additionally, various digital initiatives undertaken by Live Nation are likely to improve the ticket booking experience and further drive the top line. Meanwhile, its food and beverage initiative at amphitheaters continues to improve on-site experience, consequently driving increased spend per customer. This initiative, coupled with the addition of more points of sale as well as continuous refinement of its product assortment and pricing are anticipated to boost concert business profitability.

Moreover, Live Nation's ticketing business that operates under the well-known brand, Ticketmaster, has been posting solid revenues for the last few quarters. Also, the company 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.

Meanwhile, its sponsorship & advertising business has been well-balanced between sponsorship and online advertising, with both parts of the business growing revenues and adjusted operating income in double digits through the first nine months of 2017.

The Zacks Consensus Estimate for the quarter’s sales is pegged at $2.06 billion, reflecting an increase of 14.9% year over year.

However, the overall macro environment might dent Live Nation’s revenues to some extent. Per management’s last conference call, forex had an adverse impact of 1% on the company’s business in the third quarter but was becoming less of an issue in the quarter under review.

That said, the company typically experiences lowest financial performance in the first and fourth quarters of the calendar year as its outdoor venues are primarily used and festivals primarily occur during May through October. Per the Zacks Consensus Estimate, the company is anticipated to report a loss of $1.08, showing a deterioration of 86.2% year over year.

Quantitative Model Prediction

Our proven model shows that Live Nation does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat in the fourth quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate is pegged at -3.06%.

Zacks Rank: Live Nation has a Zacks Rank #4 (Sell). 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.

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

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 (LON:CCL) Corporation (NYSE: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. (NASDAQ: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. (NASDAQ: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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