Leisure Stock Q1 Earnings Due on May 8: MAR, LQ, CWH & More

The Q1 reporting cycle is underway with 409 S&P 500 members having released their quarterly numbers (as of May 4) and multiple reports scheduled for release this week. More than 850 companies, including 46 S&P 500 members, will report earnings this week.

Per the latest Earnings Preview, 78% surpassed earnings estimates while 75.6% beat revenue estimates and 63.3% outpaced both the counts. Further, total earnings of these companies increased 24% from a year ago on 9.3% higher revenues.

The report projects an 23.2% year-over-year rise in total earnings for S&P 500 companies, with revenues likely to increase 8.7%. This compares favorably with the year-over-year increase of 13.4% for earnings and 8.1% for revenues in the last reported quarter.

Consumer Discretionary Sector on Growth Path

The widely diversified Consumer Discretionary sector is likely to put up a decent show in Q1 earnings.

Currently, the domestic economy is favorable for the consumer discretionary sector on increased demand for goods and services. According to the Fed’s forecast, the economy will grow at a reasonable rate of 2.7% in 2018. Moreover, high real disposable income and low inflation are resulting in improved purchasing behavior. The fourth quarter of 2017 saw the highest consumer spending in three years.

Total earnings for the sector are expected to increase 13.2% in the first quarter, compared with 0.8% in the last reported quarter. Revenues are expected to grow 6.9%, higher than 4.6% in the preceding quarter. Margins are also expected to improve 0.7%, comparing favorably with the 0.4% decline seen in the fourth quarter of 2017.

U.S. Hotels Seem Comforting

There are ample reasons why the U.S. hotel industry, within Consumer Discretionary, should continue to gain on both the top and the bottom line. A strong economy, higher income and increased consumer confidence have driven demand for both leisure and business travel. The supply-demand environment in the United States has been favorable since 2010, with growth in demand outpacing supply growth. STR/Tourism Economics expects demand (2.3% rise) to outpace supply (increase of 2%) in 2018. Moreover, per a report by Deloitte, the hotel industry is expected to sustain strong 5-6% growth throughout 2018.

The Zacks Hotels and Motels industry has rallied 24.6% in the past year, outperforming the S&P 500’s 11% growth.

Hotel bigwig Marriott International, Inc. MAR is scheduled to report first-quarter 2018 numbers on May 8, after market close. The hotel chain’s aggressive expansion strategies are expected to have majorly aided revenues in the first quarter. (Read more: Marriott Q1 Earnings: Will RevPAR Growth Boost Sales?)

The Zacks Consensus Estimate for revenues is pegged at $5.75 billion, reflecting 3.5% year-over-year growth. Moreover, the consensus estimate pegs earnings at $1.25, suggesting 23.8% year-over-year growth. Marriott carries a Zacks Rank #3 (Hold) and an Earnings ESP of +0.40%, a combination that increases the odds of a beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Also, the company’s shares have gained 41% in the past year.

Another major hotelier La Quinta Holdings Inc. LQ is scheduled to report first-quarter 2018 results on May 8, after market close. The company is expected to get acquired by Wyndham WYN in 2018. The company’s shares have outperformed the industry with 44.4% growth in the past year.

The Zacks Consensus Estimate for earnings stands at a penny, reflecting a year-over-year decline of 75%. Meanwhile, analysts polled by Zacks project revenues of $223.52 million, reflecting a decline of 4.6% from the year-ago quarter. La Quinta carries a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that doesn’t suggest a beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Belmond Ltd.BEL is also scheduled to report first-quarter 2018 numbers on May 8, after market close. The consensus estimate for the bottom line is pegged at a loss of 12 cents, which indicates a 25% improvement year over year. Meanwhile the consensus estimate pegs revenues at $100.92 million, reflecting 5.8% growth from the year-ago quarter. The company’s Zacks Rank #3 and Earnings ESP of 0.00% dim possibilities of a beat. Shares of the company have lost 11.8% in the past year.

A Mixed Bag for Leisure and Recreation Services

Although the Zacks Leisure and Recreation Services industry, within Consumer Discretionary, has lost 0.2% in the past year, underperforming the S&P 500’s growth, increased consumer spending on leisure stocks is expected to have favored the industry in the first quarter.

Planet Fitness, Inc. PLNT, operator and franchisor of fitness centers, is slated to report first-quarter 2018 results on May, 8, after market close. The company’s shares have gained a whopping 93.3% in the past year outperforming both the S&P 500 market and the industry.

The consensus estimate for earnings stands at 27 cents, reflecting a year-over-year increase of 42.1%. Meanwhile, analysts polled by Zacks project revenues of $114.44 million, reflecting a rise of 25.6% from a year ago. Planet Fitness carries a Zacks Rank #3 and an Earnings ESP of 3.62%, a combination that increases the odds of a beat.

Meanwhile, Camping World Holdings, Inc. CWH will also release first-quarter 2018 earnings on May 8, before the market opens.

The Zacks Consensus Estimate for revenues is pegged at $1.06 billion, reflecting 19.6% year-over-year growth. Moreover, the consensus estimate pegs earnings at 41 cents, suggesting 7.9% year-over-year growth. Camping World carries a Zacks Rank #3 and an Earnings ESP of -1.62%, a combination that reduces the chances of a positive surprise. Meanwhile, shares of the company have declined 16.5% in a year’s time.

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Wyndham Worldwide Corp (WYN) : Free Stock Analysis Report

Marriott International (MAR) : Free Stock Analysis Report

La Quinta Holdings Inc. (LQ) : Free Stock Analysis Report

Belmond Ltd. (BEL) : Free Stock Analysis Report

Camping World Holdings Inc. (CWH) : Free Stock Analysis Report

Planet Fitness, Inc. (PLNT) : Free Stock Analysis Report

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