The market expects Caesars Entertainment (CZR) to report a year-over-year profit increase on higher sales when it reports results for the quarter ending September 2023. This widely known consensus outlook is important in assessing the company’s financial performance, but a key factor that could affect the near-term share price is comparing actual results to these estimates.
The stock could rise if these key numbers beat expectations in its upcoming earnings report, which is expected to be released on October 31st. On the other hand, if they are missing, the stock could fall.
While the sustainability of the immediate price change and future earnings expectations will depend primarily on management’s discussion of business conditions at the earnings release, it is worth limiting the likelihood of a positive EPS surprise.
Zacks Consensus Estimate
This casino and resort operator is expected to report quarterly earnings of $0.27 per share in its upcoming report, representing a year-over-year change of +12.5%.
Revenue is expected to be $2.91 billion, up 0.9% from the year-ago quarter.
Estimation of the revision trend
The consensus EPS estimate for the quarter has been revised upward by 10.66% over the past 30 days and is now at current levels. This essentially reflects the way the covering analysts have collectively reassessed their initial estimates over this period.
Investors should note that an aggregate change may not always reflect the direction of estimate revisions by the individual covering analysts.
Estimate revisions prior to a company’s earnings release provide an indication of business conditions for the period in which the results are reported. Our proprietary surprise prediction model – the Zacks Earnings ESP (Expected Surprise Prediction) – is based on this insight.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The most accurate estimate is a more recent version of the Zacks Consensus EPS estimate. The idea is that analysts who revise their estimates right before an earnings release have the latest information, which could potentially be more accurate than they and others contributing to the consensus had previously predicted.
Thus, a positive or negative Earnings ESP value theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the predictive power of the model is only significant for positive ESP values.
A positive Earnings ESP is a strong indicator of earnings growth, especially when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP value is not an indication of a loss of profit. Our research shows that stocks with negative Earnings ESP values and/or a Zacks Rank of 4 (Sell) or 5 (Strong Sell) are difficult to predict an earnings beat with any degree of certainty.
How have the numbers developed for Caesars Entertainment?
For Caesars Entertainment, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become more optimistic about the company’s earnings outlook. This has resulted in an Earnings ESP of +10.35%.
On the other hand, the stock currently has a Zacks Rank of #2.
So this combination suggests that Caesars Entertainment will most likely beat the consensus EPS estimate.
Does the history of earnings surprises provide any clues?
When calculating estimates for a company’s future earnings, analysts often consider the extent to which it has matched previous consensus estimates. So it’s worth taking a look at the surprise story to assess its influence on the coming number.
For the most recently reported quarter, Caesars Entertainment was expected to report earnings of $0.33 per share when the company actually produced earnings of $0.82, representing a surprise of +148.48%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Above- or below-average earnings may not be the sole basis for a stock to rise or fall. Many stocks end up losing ground despite a decline in earnings due to other factors that disappoint investors. Similarly, unforeseen catalysts are helping a number of stocks rise despite a lack of earnings.
However, betting on stocks that are expected to beat earnings expectations increases the chances of success. For this reason, it’s worth checking a company’s Earnings ESP and Zacks Rank before its quarterly release. Make sure to use our Earnings ESP filter to find the best stocks to buy or sell before they are reported.
Caesars Entertainment appears to be a compelling candidate for earnings growth. However, investors should also consider other factors to bet on this stock or stay away from it before its earnings release.
The expected results of an industry player
Royal Caribbean (RCL), another Zacks Leisure and Recreation Services industry stock, is expected to report earnings per share of $3.43 for the quarter ending September 2023. This estimate suggests a year-over-year change of +1,219.2%. Quarterly revenue is expected to be $4.02 billion, up 34.5% from the year-ago quarter.
The consensus EPS estimate for Royal Caribbean has been revised upward by 0.3% in the last 30 days and is now at current levels. However, a higher most accurate estimate has resulted in an Earnings ESP of 1.42%.
This Earnings ESP combined with its Zacks Rank #3 (Hold) suggests that Royal Caribbean will most likely beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the last four quarters.
Stay on top of upcoming earnings releases with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.