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Will Live Nation (LYV) Pull Off a Surprise in Q3 Earnings?

Live Nation Entertainment, Inc. LYV is scheduled to report third-quarter 2017 results on Nov 2, after the market closes.

The Zacks Consensus Estimate for the quarter’s earnings is pegged at 55 cents per share, reflecting an increase of 13.2% year over year.

Historically, the company has operated through four segments – Concerts, Ticketing, Artist Nation, and Sponsorship & Advertising. But from 2017, it has started reporting only under three business segments by combining its Concerts and Artist Nation segments into one.

Markedly, all these segments, especially the Concerts segment, have been witnessing revenue growth backed by higher tickets sales over the last few quarters. We expect this trend to have continued in the to-be-reported quarter as well. In fact, during the second-quarter conference call, management noted that the initial days of third-quarter 2017 continued to witness strong growth in its concerts business.

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 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.

The Zacks Consensus Estimate for the quarter’s sales is pegged at $3.37 billion, reflecting an increase of 6.2% year over year.

However, the overall macro environment might dent Live Nation’s revenues to some next. Per management’s last conference call, forex had an adverse impact of 1% on the company’s business in the second quarter but was becoming less of an issue in the quarter under review. Hence, it remains to be seen how currency movements impact the results in third-quarter 2017.

Despite the above-mentioned headwinds, our proven model shows that Live Nation has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat in the third 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 +4.59%. This is a major indicator of a likely positive earnings surprise.

Zacks Rank: Live Nation’s Zacks Rank #3 when combined with a positive ESP makes us reasonably confident of an earnings beat.

Conversely, 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.

Live Nation Entertainment, Inc. Price and EPS Surprise

Other Key Picks

Here are some companies to consider as our model shows they also have the right combination of elements to post earnings beat this quarter:

Activision Blizzard, Inc. ATVI has an Earnings ESP of +5.80% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Glu Mobile Inc. GLUU has an Earnings ESP of +16.67% and a Zacks Rank #2 (Buy).

The Madison Square Garden Company MSG has an Earnings ESP of +8.56% and a Zacks Rank #3.

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The Madison Square Garden Company (MSG): Free Stock Analysis Report
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