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Caesars Entertainment (CZR) is expected to exceed revenue estimates: what you need to know prior to the second quarter release

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TThe market expects higher revenues to reduce year-over-year revenues when Caesars Entertainment (CZR) reports results for the quarter ended June 2022. While this well-known consensus outlook is important in assessing a company’s earnings performance, a strong factor that can affect short-term stock prices is to compare actual results with these estimates. How to do it.

If these key numbers are higher than expected in the next earnings report scheduled for August 2, stock prices could rise. On the other hand, if they are missing, stock prices can fall.

Imminent price fluctuations and the sustainability of future earnings forecasts depend primarily on management’s discussion of business conditions in earnings releases, but are worth handicaping the potential for a positive EPS surprise.

Zacks consensus estimate

The casino and resort operator will generate quarterly revenue of $ 0.25 per share in the next report. This corresponds to a -47.9% change over the previous year.

Revenue is expected to increase 10.9% year-on-year to $ 2.77 billion.

Estimate of revised trends

The quarterly consensus EPS estimate has been revised down 15.56% to current levels over the last 30 days. This essentially reflects how the covering analysts collectively reassessed the initial estimates during this period.

Investors should keep in mind that overall changes do not always reflect the direction of each cover analyst’s estimate revision.

Whisper of revenue

Estimating revisions prior to announcing a company’s financial results provides clues to the business situation during the period of results. Our unique Surprise Prediction model, Zacks Earnings ESP (Expected Surprise Prediction), is centered around this insight.

Zacks Earnings ESP compares the most accurate quarterly quote with the Zacks consensus quote. The most accurate quote is the latest version of the Zacks Consensus EPS quote. The idea here is that analysts who revise their quotes just before the announcement of financial results have the latest information. This may be more accurate than previously predicted by others contributing to consensus.

Therefore, positive or negative revenue ESP readings theoretically indicate a possible deviation of the actual revenue from the consensus estimate. However, the predictive power of the model is important only for positive ESP measurements.

Positive Earnings ESPs are a powerful predictor of revenue beats, especially when combined with Zacks Rank # 1 (Strong Buy), 2 (Buy), or 3 (Hold). According to our research, this combination of stocks has a close to 70% chance of producing a positive surprise, and a solid Zacks rank actually enhances the predictive power of Earnings ESP.

Note that negative Earnings ESP readings do not indicate a revenue error. According to our research, it is difficult to predict the earnings beat with some confidence for stocks with a negative earnings ESP measurement or a Zacks rank of 4 (sell) or 5 (strong sell). is.

How were the Caesars Entertainment numbers shaped?

For Caesars Entertainment, the most accurate quote is higher than the Zack Consensus quote, suggesting that analysts have recently been bullish on the company’s earnings outlook. This resulted in a revenue ESP of + 1.82%.

On the other hand, the Sachs rank of this stock is currently 3rd.

Therefore, this combination indicates that Caesars Entertainment is likely to exceed the consensus EPS estimate.

Do you have any clues in your earnings surprise history?

Analysts often consider how well they were able to match past consensus estimates when calculating a company’s future revenue estimates. Therefore, it is worth checking out a history of surprises to measure the impact on future numbers.

In the last reported quarter, when Caesars Entertainment actually lost $ 2.11, it was expected to record a loss of $ 2.15 per share, a surprise of + 1.86%.

In the last four quarters, the company has exceeded the EPS consensus estimate twice.

Conclusion

The only basis for a rise or fall in stock prices may not be a beat or mistake in earnings. Many stocks eventually lose ground, even though earnings have outstripped due to other factors that disappoint investors. Similarly, unexpected catalysts help many stocks rise despite profit mistakes.

However, betting on stocks that are expected to exceed earnings expectations increases the odds of success. Therefore, it is worth checking the revenue ESP and Zack Rank of a company prior to its quarterly release. Before reporting, use the Earnings ESP Filter to find the best stock to buy or sell.

Caesars Entertainment seems to be an attractive and profitable candidate. However, investors need to be aware of other factors as they bet on this stock and move away from it before the earnings announcement.

Stay tuned for upcoming earnings announcements on Zacks’ earnings calendar.

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The views and opinions contained in this document are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.