Is A Surprise In Store For Wyndham (WYN) In Q3 Earnings?

Wyndham Worldwide Corporation (NYSE:WYN) is scheduled to report third-quarter 2016 numbers on Oct 26, before the opening bell.

Last quarter, Wyndham posted a positive earnings surprise of 2.94%. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 1.89%.

Let’s see how things are shaping up for this announcement.

WYNDHAM WORLDWD Price and EPS Surprise

WYNDHAM WORLDWD Price and EPS Surprise | WYNDHAM WORLDWD Quote

Factors Likely to Influence this Quarter

Wyndham’s strong developmental pipeline, consistent expansion plans, significant international exposure and robust marketing efforts should drive earnings in the to-be-reported quarter. Moreover, the company’s robust vacation ownership business – which is gaining popularity among millennials lately – should further boost results. Also, Wyndham’s attractive Loyalty and Rewards Program along with other initiatives undertaken should lead to increased occupancy.

However, lingering uncertainty in various economies like Europe, Brazil and China is likely to limit revenue growth. Also, soft demand in oil producing regions is likely to hurt RevPAR in the third quarter.

Additionally, though the U.S. dollar weakened slightly in 2016 from the previous year, the negative currency impact is still significant and is expected to reduce the value of overseas sales. This would hurt revenues and profits in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Wyndham is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.

Zacks ESP: Wyndham has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.87.

Zacks Rank: Wyndham has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, 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 revisions.

Stocks to Consider

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

Boyd Gaming Corporation (NYSE:BYD) has an earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Live Nation Entertainment, Inc. (NYSE:LYV) has an earnings ESP of +2.04% and a Zacks Rank #3.

Time Warner Inc. (NYSE:TWX) has an earnings ESP of +1.49% and a Zacks Rank #3.

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